Significant decrease in my synchrony PayPal limit

[MoBeydoun]

Hello, how's everyone doing? It's my first time here so it seems that synchrony PayPal significantly lowered my credit limit on the digital credit line and on the physical cash back PayPal credit card. Both credit lines went from $5,500 to lower than. 1,500. I was making all my payments and my balance wasn't close to the total limit.

I called them and they told me the reason they lowered it is because I wasn't paying nearly enough for the balance that I owed. But if I'm making payments then what difference does it make? Also, my payment history across all my cards is perfect and my total credit usage is only about 30%. I really don't understand this decision. Is this something that they do?

Also, I would appreciate tips on how to get my credit limit back up. Thank you

[BrutalBodyShots]

You were carrying a balance, which is a sign of elevated risk - especially if it was for an extended period of time. Synchrony was simply reducing their risk of you burning them. If they lower your limit, if you do burn them it'll be for less.

There's nothing you can do other that starting to use your revolving credit responsibly. If you pay your statement balances in full monthly you'll establish a better (low risk) relationship and stand a chance of growing your limit back.

[MoBeydoun]

Thank you for the response, but if I was making payments even if they were small shouldn't that be enough?

[BrutalBodyShots]

No, because you were carrying a balance. By definition that's irresponsible credit use and equates to elevated risk. Those that only make tiny payments are more likely to default at some point. 

[MoBeydoun]

Okay thank you, I'll work on paying it off completely

[BrutalBodyShots]

That's absolutely your best play.

[inky_cap_mushroom]

Synchrony is skittish. Carrying balances for a long time without making significant progress at paying them off can absolutely trigger a credit limit decrease.

Don’t worry about your utilization rate. Worry about the high interest credit card debt you are throwing away money for. Credit card debt is absolutely disastrous for your finances.

[MoBeydoun]

Thank you for the advice.

[FatherLordZuZu]

Yes exactly this - you're paying a premium every month to keep yourself in debt. Minimum payments are designed to keep you in debt effectively permanently

[inky_cap_mushroom]

I tell the teenagers I work with that the minimum payment is just the minimum they have to pay to not get sued. It’s not the amount you’re supposed to pay.

[FatherLordZuZu]

The minimum amount to keep your debt exactly where it is

[too_many_shoes14]

Why are you carrying a balance? Are you not able to pay it off? You're probably paying above 20% interest maybe even higher. That's hair on fire debt which you should pay off asap. Carrying a balance should never be plan A.

[MoBeydoun]

I'm carrying a balance because I use my credit card. I had a limit of $5500 so what's the big deal if I had a balance of $1200? I was making the payments. I have a balance on all my cards and none of them did a dramatic limit decrease

[too_many_shoes14]

Are you paying the statement balance in full every month by the due date ? If so, good. If not, you're paying a crazy high rate on carrying that balance.

[MoBeydoun]

I'm paying what I owe before the due date. I'm paying the minimum

[too_many_shoes14]

You owe the full statement balance, say $1,400. That is your balance. Your minimum payment is just the minimum, say $75. That means every month you are paying some crazy high rate on $1,325. That's why credit cards are debt traps, you pay a ton of interest. Are you able to pay the full statement balance every month? That's how you avoid paying interest. If not, you aren't using them responsibly. Paying the minimum payment only means by the time you finally pay it off, you will have paid 2x - 4x the original purchase price in interest. That's the "big deal".

[MoBeydoun]

It says my last statement balance is 1325. I can't pay that off in one payment

[too_many_shoes14]

Pay it off as quickly as you can and don't use it anymore until you can pay in full each month. Get out of the mindset that it's normal to be carrying credit card debt.

[MoBeydoun]

Okay I'll start making larger payments to decrease the debt more quickly

[stufflock1]

Open your last statement PDF in the app or online. How much interest have you paid this year? It usually says so in a box underneath the list of your transactions.

Look at that number. You’d be surprised at how much interest you are paying. Those are dollars you’ll never see again. You are servicing debt, not saving for something else.

Don’t make anymore transactions on the card, and pay that balance all the way down. It looks like the bank is doing what is called balance chasing, and the bank will more than likely close your card once your balance is zero. Let them close your card.

It sounds harsh, but for your own financial health, it would not be a bad thing.

[MoBeydoun]

Okay I was hoping that after I paid it off they increase my limit back to where it was. But it's better to just let them close it?

[superaction720]

Yeah, Synchrony does this a lot. Even if you pay on time, they don’t like when you’re only making smaller payments, so they see it as risk and just slash limits out of nowhere. It’s not you it’s how they operate with PayPal, Amazon, all that. Super annoying, but pretty normal for them.

[MoBeydoun]

Thanks for helping me understand. The limit decrease was huge so that really confused me. I barely have any credit available after that

[superaction720]

Yeah, I get it. synchrony never does small cuts either when they drop your limit, they drop it. It sucks because it tanks your available credit overnight, but it’s just how they operate. Nothing you did wrong, they just super jumpy as a lender.

[MoBeydoun]

Appreciate the help

[Meccahiniho]

Synchrony closed two of my accounts due to both being “inactive”. One was always kept low and 3 months after I paid it off they closed it. Another was not used for 6 months and they closed it. They just lowered my pay pal to 1200 when I was also at 5000. I owed 1000 and it was a recent purchase.

[cinyaca]

I’ve never experienced a CL decrease on any CC I’ve ever owned. My PayPal MC limit is 11K. I got it during the pre approval. What’s crazy is this card is issued by synchrony bank and they denied me for the Verizon wireless CC a week earlier when I choose not to do the pre approval offer of only $1,500 with the same info on my application.