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Credit limit restored to original amount after glitch

Credit limit has been restored to original amount after glitch

Q: I opened a GE Bank Sam's Club Discover card more than four years ago. This card has always been my primary card.

I pay a $100 annual membership fee; one of the benefits includes receiving as much as a 2 percent rebate on purchases. My average monthly spending on this card alone is more than $4,500, allowing me to earn about $1,000 in cash rebates each year. I pay it off in full each month.

Last November, without prior notification, GE Bank sent a letter that informed me it had reduced my credit line from $15,000 to $13,060. I checked my credit reports and saw nothing incorrect or out of the ordinary, but felt comfortable with the reduced line since I spend less than half of that amount on average each month.

Four months later, I received a shocking letter from GE Bank, informing me of its decision to reduce my credit line to $1,000, an amount that equals about a week's spending. The reasons on the letter were exactly the same as the previous one.

The letter referenced balances owed on other lines of credit being too high as well as my proportion of balances to credit limits being too high. This was not reflected in my credit report and, within those four months, I had continued to pay down all my non-interest cards and to pay in full all cards on which purchases were charged.

Since this reduction I have sent GE Bank multiple letters requesting specific information that would cause my account to be restricted. The responses I received were vague generic letters that directed me back to my original generic letter.

I would like to have my credit reinstated and receive an acceptable and detailed reason for the original reduction.

Wendell Schott

A: Judging from some recent news stories, you're not the only credit customer to experience ill treatment from your card company.

In May, some American Express customers had their limits slashed and were threatened with account closure. The company even asked for copies of their tax returns, according to a Los Angeles Times story.

Banks refer to this reassessment of credit accounts as "risk reduction."

GE Bank didn't respond to Action directly, but it did respond to you, citing Action's inquiry as its impetus.

You let us know a representative in Sam's Club Consumer Affairs Department called you to apologize for the error.

"She could not explain the reason for GE Bank's actions but said that she was 'truly sorry' for what appeared to be 'an internal error' or a database 'glitch' somewhere on the underwriting side," you said.

She agreed you had a good credit history, and it appeared that the underwriting department probably never bothered to check your credit report, despite your frequent calls and letters.

GE Bank has since decided to restore your credit limit to its original $15,000.

For your troubles and the inconvenience, Sam's Club promised a $50 credit would be added to your account immediately.

Credit limit restored to original amount after glitch 08/22/09 [Last modified: Saturday, August 22, 2009 4:30am]
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