Has your Credit Card limit decreased? Check now, you may have done this

During the Coronavirus lockdown, bank customers have been found complaining on Twitter that their credit card limit has suddenly decreased. So, if you are a credit card holder, it's important for you to know what's happening. Credit card limit being reduced during lockdown can certainly be a big problem for many.

Speaking on credit card limits of some customers being decreased, SEBI registered tax and investment expert, Jitendra Solanki said, "Analysing the creditworthiness and card usage of credit card holders is a regular process taking place at banks. The ongoing exercise is not unique to the current period when lockdown is in effect. Based on credit card spends and repayment data, banks have the right to analyse credit limits of customers, and offer to increase or reduce the credit limit, depending on the case."

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On complaints of credit card limit being decreased of such card holders who have availed EMI moratorium, Solanki said, "Those who have availed EMI moratorium, have indirectly informed their banks about their financial condition. The bank is, in fact, helping them by curtailing their credit card limit. In the case of monetary crisis, people often switch towards credit card use and that may lead to a default. When there is no money left, people will be looking to decrease their expenses. So, those who availed EMI moratorium should look at credit card limit reduction from this angle." 

Manikaran Singhal, SEBI registered tax and investment expert said, "When the economy goes under stress, credit card issuers start reviewing their portfolios more aggressively to cut down the risk. It had happened in 2008 economic crisis as well. Lenders consider different parameters to check if any segment of their portfolio could be under stress, and identify customers accordingly." Singhal said that banks are reducing credit card limit to avoid any kind of credit card default in future. However, Singhal maintained that banks would be reducing credit card limit of those customers who are vulnerable in the COVID-19 virus caused economic crisis.