Could COVID-19 affect your credit card limit?
TORONTO -- A Toronto man says that his credit card limit was slashed without warning as a result of COVID-19.
John Guevarra has a large family and says he likes to have a large credit limit balance in case of emergencies.
Guevarra has a Walmart Mastercard with a credit balance limit of $7,000, but said it was reduced to $1,100 without notice.
“I’ve been with them for six years. I have not done anything wrong. I pay my bills on time and the credit bureau says I’m in good standing" Guevarra said.
“They told me due to covid-19 credit card limits are being slashed.”
Syed Hussain of Milton had a similar experience.
His credit limit was dramatically reduced as well and was told COVID-19 was the reason.
Hussain has a PC Financial Mastercard with a limit of $17,500. He says his limit was just reduced to $1,700, despite having a balance of zero and a good credit rating.
“My income was good, my credit was fantastic. I made timely payments and I never missed any payments" said Hussain.
CTV News Toronto reached out to Duo Bank which issues Walmart credit cards. A spokesperson told us that changing credit card limits is an “industry standard practice” and that those limits are subject to change over time.
Duo Bank then reinstated Guevarra's credit limit back to $7,000.
CTV News Toronto also reached out to PC Financial and a spokesperson said “like all financial institutions, we use a variety of factors to determine credit limits.”
Hussain's limit was raised back to $7,000 and he can have it reviewed in 3 months to see if he can raise it again which was suitable for him.
Credit card companies may be looking to prevent future losses by cutting credit limits and lines of credit could be next. There is concern that consumers with large credit limits could make a lot of purchases, start missing payments and then be unable to pay the money back.
Neither Walmart nor PC addressed COVID-19 as the reason for the credit limit changes in their statements to CTV News Toronto.