A Trick Issuers of Credit Cards Use

Stephen Yearwood
2 min readJun 3, 2024

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to lower credit scores and drive up interest rates

Photo by Avery Evans on Unsplash

Other than credit history and ratio of debt to income, the most important part of a person’s credit score is how much of one’s available credit a person has used. The more of it a person has used, the lower that person’s score.

Credit scores affect many things. It is almost as important as a person’s ‘social score’ is in Communist China. It can affect employment and housing — mortgage rates and even whether a person will or will not be allowed to rent a place. Its most direct affect is on the interest rates a person will be charged for any borrowing, to include already usurious rates on credit cards.

So an issuer of a credit card has an incentive to lower a cardholder’s available credit limit. That has happened to me more than once — even though my payment history is unblemished and nothing else had changed, such as income, to justify reducing it.

It cannot possibly cost the issuer of the card anything to have unused available credit on it, but that does not stop them from engaging in that practice. Obviously, a lower limit means that any balance that might be carried on the card in the future will have a bigger adverse affect on the cardholder’s credit score than it would have had with the previous, larger limit, further lowering the score and driving up the interest rate that will be charged.

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Stephen Yearwood

unaffiliated, non-ideological, unpaid: M.A. in political economy (where philosophy and economics intersect) with a focus in money/distributive justice