Have you received notice that the limit on one of your credit card accounts was lowered? If so, it can be difficult news to accept and leave you wondering what to do next. Yet the important thing to remember is that you are still the customer and have plenty of options. Here are some potential responses to having your credit limit lowered.
1. Ask the card issuer to reconsider.
It’s unlikely that a human being made the decision to cut your credit limit. The action was probably the result of a computer program detecting patterns in your account that could increase your risk of default. Thankfully, your card issuer’s customer service representatives may have the power to reverse the decision.
To maximize your chances of success, contact the card issuer and have a friendly conversation about your loyalty to the company and responsible money management. Also, it can help to make a payment and cut your balance as much as possible before calling. As the saying goes, banks seem to only want to loan money to those who don’t need it.
Pros: Making a phone call can result in having your line of credit restored.
Cons: Many people don’t have the time or patience to call their bank or don’t want to risk further rejection.
2. Apply for a new credit card.
If you need a larger line of credit than your card issuer is willing to provide, you can consider applying for a new credit card. And just like having your credit reduction reversed, you will have a better chance of being approved for a new account when you have as small of an outstanding balance as possible. You’ll want to know where your credit stands before you apply, as that will be a major factor in whether you get approved. A good credit score allows you to apply for cards with a better interest rate.
Pros: Being approved for a new card can mean a larger total line of credit, new benefits and even a sign-up bonus. Having an additional account will also increase your credit history.
Cons: You’re unlikely to be approved for a new card if you’ve already maxed out most of your existing lines of credit. Applying for a new credit card will also create a hard inquiry on your credit, which will ding your credit score slightly. You can see how inquiries are affecting your credit scores for free on Credit.com.
3. Cancel your credit card.
Some people may chose to cancel their credit card after having their line of credit reduced. They might do this because their card is less useful with a smaller line of credit or because they’re offended and no longer wish to do business with the issuer.
Pros: The credit card industry is fiercely competitive and customers should be able to give their business to a card issuer willing to offer them a sufficient line of credit.
Cons: Canceling a credit card account will further reduce your available credit, increasing your debt to credit ratio, for a given amount of debt. It will also lower your average length of credit history and reduce your credit history going forward.
4. ‘Sock drawer’ the card.
Perhaps a happy medium between closing a card account and continuing to use it is to pay off the existing balance and stop using it, by placing it in your sock drawer perhaps.
Pros: Cardholders gain all the benefits of having an open account with a line of credit, albeit diminished. At the same time, customers may feel better by giving their business to another issuer.
Cons: If the credit card has an annual fee, then it’s most likely a waste of money to keep the account open. However, you could just keep the account open until the annual fee is due, then cancel if the card issuer won’t restore your old line of credit.
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This article originally appeared on Credit.com.