Banks change credit market

If your credit card company just slashed your available line of credit — and millions of consumers have seen their credit lines snipped — maybe it's time to call the credit card company and ask for a change of heart.

Judy Pauley, a retiree in Shelby Township, Mich., was shocked when Bank of America sent her a letter saying it would cut the line of credit on her card from $25,000 to $12,500. She had been a customer for 19 years. The payment was never late. The bill was paid in full each month.

So she made a call and she got Bank of America to increase that line to $20,000. She told the bank her income, but not much else.

Asking for a higher credit line could work for some consumers but not everyone.

If you've been late with your bills — or are carrying too much debt — you'd be better off keeping quiet. Your credit lines could be cut further or the issuer could close the account if you complain.

"It's a little bit of a gamble," warned Emily Peters, a credit expert for Credit.com in San Francisco.

Even if you've never, ever charged anywhere near those super-high limits, credit card issuers fear how much you could charge — if you suddenly had to take a huge pay cut, if you could no longer borrow against your house to pay down credit card debt, if you lost your job and had a hard time finding another one.

Some credit card issuers, Peters said, are even watching where you spend your money to spot signs of some hardship. Say, if you used to be a regular high-end shopper at Nordstrom and now you're frequenting Wal-Mart.

"There are very strange things coming out of the credit card industry," she said.

Many folks saw their credit card limits cut significantly by Bank of America recently. Other issuers are trimming credit lines as well, including Discover and American Express.

To be sure, many consumers don't want to dig themselves any deeper in debt in the Great Recession. Many have no plans to use the ridiculously large lines issued during the crazy credit boom.

One expert estimates that about $5 trillion is available in credit-card lines nationwide and forecasts that credit lines could be cut by up to $2 trillion by year-end, including credit limits that are gone when accounts are closed or charged-off as bad debts.

Consumers are smart to pay down debt — but they don't want to close cards just because an issuer raises rates or cuts credit limits.

Peters suggests that consumers should pay off the card and let it go dormant.

You definitely want to open any mail you receive from your credit card company and review your statements to see where your limit stands.