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Capital One Reducing Credit Limits

Credit limits getting reduced has been an ongoing side effect during the coronavirus pandemic, with many drawing similarities to the 2008 Great Recession. Now, Capital One is reportedly reducing the credit limits of hundreds of cardholders. Here’s what you need to know.

Reports: Capital One Cutting Credit Limits

Credit card issuers reducing credit limits during the COVID-19 pandemic is something that has been rumored for some time. Now, however, there is more tangible proof of the phenomenon, with Capital One the latest issuer to slash card limits.

Multiple current Capital One credit cardholders are seeing their credit lines minimized by the issuer. Some users are reporting reductions of as much as $10,000. Popular credit card forum, Doctor of Credit, indicates the most common credit limit cuts are to around $5,000, $2,000, or $1,500, but there are still significant variations.

Why Is Capital One Lowering Credit Limits?

One common feature of many of the cardholders claiming a credit limit reduction is minimal credit card usage. Those cardholders who only used their Capital One credit cards to make minimum purchases appear most likely to see a reduction in their credit card limits.

On the contrary, those who regularly use their Capital One cards, carry a balance, and pay more than the minimum balance due each month, seem to be either maintaining their current credit limits or even receiving a credit limit increase.

Credit card issuers make their money on interest payments. Because of this financial model, banks love cardholders who carry a balance regularly and make on-time payments. Those customers keeping a credit card open for credit score purposes (average age of credit, credit utilization, etc.) without regular spending, on the other hand, are less appealing to issuers. While spending more than you can afford is never advisable, to ensure you retain your current credit limit, use your credit cards regularly and pay your bills on time – and in full, if possible.

Related Article: How to Increase Your Credit Limit

About: Cory
Cory Santos

Cory is BestCards.com's "Jack of all trades" and resident rewards expert, covering all facets of the points game – especially travel, hotels, and airlines. In addition to credit cards, Cory finds that jogging, cats, and memes are essential parts of a balanced day.