Banks boost borrowers’ card limits without telling them, report finds

The Consumer Financial Protection Bureau[4] (CFPB) found that U.S. issuers boosted credit lines for about 4% of cards in each quarter of 2018. That’s double the rate in 2012, Bloomberg found. But the regulator also found that increases came faster for subprime and near-prime customers. 

Banks defend the increases as good customer service, saying they take care in raising spending limits and discourage reckless borrowing. 

“Capital One examines a number of factors before determining whether a customer is eligible for a credit line increase, including reviewing their credit and payment history, debt-to-income ratio and ability to pay,” a spokeswoman told Bloomberg in a statement. “Acting in the best interest of our customers is our paramount consideration at every step of our credit decisioning process — every policy, practice, discussion and service we offer is grounded by that core principle.”

JPMorgan Chase said it avoids raising limits for subprime cardholders.

“In a very targeted way, we grant credit line increases to creditworthy customers who have demonstrated consistent usage of the card and have shown strong repayment patterns,” a JPMorgan spokeswoman said.

D’Ante Jones, a musician from Houston, said JPMorgan nearly doubled his spending limit last year — without consulting him — when he had almost reached his borrowing limit. “It’s like putting a sandwich in front of me and I haven’t eaten all day,” Jones told Bloomberg. “How can I not take a bite out of it?”

Banks can also let customers reverse the increases, but Jones said he was unaware of that. “I didn’t know there was a way to say no,” he said.

References

  1. ^ Bloomberg report (www.bloomberg.com)
  2. ^ $880 billion (www.newyorkfed.org)
  3. ^ December 2017 paper (www.bostonfed.org)
  4. ^ Consumer Financial Protection Bureau (files.consumerfinance.gov)

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