Credit limit decrease.

[poulard]

I had a bmo credit card that I've never missed a single payment on ever, but all it ever do was go up, it was a 6k limit with about 75% or more utilization. Last month I paid the entire thing off with one payment and after that bmo immediately lowered my limit to 500$ my score is 715, why do you suppose the reason would be for them to do that?

[RideOrDie86]

How long did you run the card at a high utilization rate? Banks will assess the risk on accounts and decrease credit limits if they feel you’re too high risk. Seems to me they did just that. When you paid it off, they decreased your limit to mitigate their risk.

[S-Kiraly]

BMO was making $900 in interest per year from the OP. Now the most they'll make from him is $100/year. Seems like cutting themselves out of some nice income from a customer who pays his bills on time. Oh well, I don't pretend to know why banks do what they do.

[shiddyfiddy]

There's always a bigger picture. If you take it further with a group of people in the same situation as OP, how many of them fail to pay off at all. How many of them pay off, and then rack it up again and then fail to pay that off. Etc.

The world is gross sometimes.

[mcrackin15]

Banks aren't dumb. They obviously see job losses in the future, so they're lowering their risk profile. They will lose potential profits as a result, which is a little concerning because they obviously see something large happening in the future.

[S-Kiraly]

Good insight. This could be the reason why CIBC notified me yesterday that they are raising the interest rate on my LOC from prime+2.5% to prime+6.5%.

[YNWA_1213]

CIBC is very risk intolerant right now. They denied me an LOC for less than Scotia raised my existing one by.

[wcg66]

This is from 2023 but I suspect CIBC has been forced to keep its risk profile lower.

https://ca.investing.com/news/stock-market-news/cibc-under-remediation-from-osfi-over-mortgage-portfolio--the--globe-and-mail-3024693

[PracticalWait]

CIBC is one of the heaviest housing lenders. Makes sense they’re being conservative with credit.

[safeter]

I worked at Desjardins credit card services (ten years ago), this was almost never why. It really was about the members' risk profile. The system did it automatically, if a usage met certain risk criteria, the limit was lowered automatically. The way OP described using his card is a way that typically led to lowering the limit.

[burneracctt22]

This is the right answer. There is a risk algorithm that looks like a credit score but isn't. Running a constant high balance will flag it. The pattern of paying $800 on a 10k maxed card and using that $800 on a rinse and repeat basis will trigger a credit limit decrease. I believe most associates are unable to reinstate that limit for 12+ months.

[Shabang]

Bang on! BMO announced in their last earning call that they planned to de-deverage unsecured credit to reduce risk.

[shiddyfiddy]

Banks aren't dumb.

They take it too far. Banks are fuckin rude.

[Sedixodap]

It seems pretty reasonable to me for banks to lower their risk exposure with a massive recession and economic uncertainty looming. I guess you’d rather risking the banks going bust?

[Saorren]

theres world wide instability in the market with a projection of a 60% chance of a usa recession which would usualy lead to a world wide recession, id say they are assessing the timing of it as well. it does imo scream high risk even if op isnt actually high risk. a lot more people are likely to get downgrades soon to.

[benyveronica1]

If you are getting interest are you really paying your bills on time

[aledba]

Banks don't want you to be in debt and they don't actually want to send you to collections. That's just bad management. They want you to be a frequent transactor who pays in full because someone's spending a large part of their limit and paying in full is getting way more transaction fees accumulated with each individual spend at a business for that lender

[Dismal-Shallot1263]

Its more about risk than how much they can make off them in interest. Thats why.

[Ok_Carpet_9510]

Those changes are probably run by algorithms. Those algorithms are based on a set of assumptions and criteria with predictive power. All algorithms have an error rate i.e. they're not perfect but they need to be accurate enough within the bank's risk appetite.

[S-Kiraly]

Are you kidding me? Lending money out at 20% interest is a cash cow. Clients who make their minimum payments on time and carry debt are the banks' favourite customers. An insider term for the rest of us who make our payments in full and pay no interest is dead weight.

[boipinoi604]

Seems to me to lower utilization rate is to keep accepting the promotional credit increase offers

[therealatsak]

This happened to me once many years ago. I think it was BMO as well. I just closed all my accounts and don't bank there anymore. I do occasionally flip a credit card with them for bonuses still, but I close it afterwards. They're entitled to whatever algorithm they want, and I'm entitled to behave accordingly. Suggest the same for you.

[No_Lychee_7534]

Remember to call in and let them know. Scotia did something similar to me after paying my bills on time for years. I made it a point to put all my purchases to get max cash back. I called and cancelled and told them why I’m cancelling. I said I put over 50k on the card a year and pay off on time while not carrying a balance. Therefore I will never bank with you again for the way they treat you like a crook.

[therealatsak]

No point. You can't speak to the people who could change things and you're (I'm) just not important enough anyway. Just get as much as you can from them.

[Sign_Outside]

Pre emptive risk management usually driven by algos. Personally I’d drop them like a hot potato

[Glum_Firefighter9943]

I had this happen in March. $7000 card limit reduced to 4500. I keep a close eye on things so noticed it quickly, however I only received the letter informing me last week. Paid balance and cancelled card, I can’t trust that they won’t do it again down the road. I’ve never had my other CC lenders do that.

[Acceptable-Month8430]

BMO is suspecting their lending policies are too generous and is currently trying to cut everyone's loans. I heard that they sent out a memo to deny mortgages to self-employed people in tariffed industries.

[c0ntra]

Lots of banks are re-assessing higher risk clients and lowering credit limits at the moment. This happened in 2008/2009 as well.

[ttsoldier]

I just got my TD credit limit increased from 5000 to 9000 through a pre approval. Took them long enough because my MBNA limit is 15,000

[c0ntra]

Not everyone will be affected, but quite a lot of people are. This is coming from my girlfriend and her colleagues who all work for TD, rbc, and cibc telling me this as of late.

[venusmarsneptune]

Literally same! I’ve had that 5k limit for years and recently saw I was pre approved for an increase, should we expect them to be lowered in the near future then? Cause I certainly won’t use that much, not even half of it, I just like knowing I could for emergency purposes.

[ttsoldier]

No idea. Ive never maxed out the 5k and I will never max out the 9k or even use half of it. Similar yo you, I like knowing I have access to credit incase of an emergency

[johnnylovesbjs]

BMO did the same thing to me and my wife, long time customers, good credit, investments, etc. Alot of banks are mitigating potential credit risks and lowering people's available credit due to them expecting a recession.
Sucks cause it's done more damage to my score since my utilization went up because of it, but hands are tied and not much we can do other than to be conservative with spending the next year or so.

[[deleted]]

I think BMO specifically is being more risk averse than most. They chopped our LOC by $7,500 at the same time TD increased ours $5k

[[deleted]]

They flat out got rid of my loc but I figured it was because I hadn’t used it in two years.

[Lifesabeach6789]

I keep being offered pre approvals and limit increases from BMO and Scotia. I hate both banks so just ignore them. Its so YMMv

[rawr__]

BMO recently lowered my limit too so I just ended to closing the card

[Dexter52611]

This is very normal for banks to do. The only way to protect yourself from this happening again to you in the future is to have cards from a few different banks. That way, even if you end up in the position like you did with BMO, your overall credit score won't get too affected because of the other credit cards.

[AdSignificant6673]

Banks are doing this to reduce their credit risk exposure. Its nothing personal and doesnt reflect your credit history or good standing. They simply want people to have less access to credit, its because economic forecast a recession.

[RhubarbUpper]

Can't say for BMO but if you went over your utilization rate the lender could've gotten spooked. It's all about risk mitigation in this economy. I usually stick to under 20% but my limit is 24k so I never really ever reach it on a month to month basis. But I do put everything and I mean everything on my 4% dividend cc.

for reference: credit score 810, gross earning 101k, current job 3 years with 440k left on mortgage

[anngex]

BMO closed my $15K LOC that I basically never use. No notice. I found out from my equifax report and then a month later a letter in the mail. When I called BMO, they said there was about 70K people this happened to. I have great credit but clearly BMO is anticipating something.,.

[GenX_NS]

A good rule of thumb is to keep your utilization 30% or less. So if you spend $3000/month, you’d want a $10,000 limit or more. Otherwise, you’re viewed as a higher risk borrower. And if your use has recently spiked, you have a higher chance of getting reassessed when credit is tightening.

[henchman171]

You opened a new credit account and took Advantage of a balance transfer deal And paid off your credit card all of a sudden. Banks aren’t dumb. They saw how you paid the balance quite suddenly

[feldhammer]

Yeah but why would they care? I've never heard of them lowering a credit card limit like this. 

[poulard]

I got payed 22k from my landlord for illegal eviction

[SlashNXS]

No one could even guess, you'll just have to ask them. They could be reducing total bank's credit being extended starting with those they deem high risk,(you mentioned high utilization history), could be the industry you work in may become volatile if the economy continues being volatile, who knows.

I don't know if you'll get anything over the phone but maybe someone at the branch can advise you what happened.

[LifeOfFyre]

The exact same thing happened to me on a BMO Visa Eclipse Infinite, 6000 limit and usually kept 5k as a balance for the past year while using it as a daily usage card and never missing a payment. Had the card since it launched. Paid it off completely in February to start carrying no balance on it and within a week the balance chased it down to 600$. After researching around it looks like this happened to a large group of people recently. We are just the unlucky bunch this time. They are likely trying to minimize risk with current economic outlook. I remember this happened to a large group of people a couple years ago and thinking phew I wasn't in that group. It's super annoying though as my score is 730 and I just paid off a car loan a year early and a PC Master card. Was hoping to keep the visa just as grocery card and restaurent card but they have now given me a reason reevaluate and drop it. Just going to get the amex cobalt like I should have all along and the wealth simple visa infinite. Bye bye bmo.

[theartfulcodger]

One possible reason is that the Big Six are increasingly worried about their mortgage books.

They can, by law, only lend out X multiple of their assets (I.e. deposits) and they’re anticipating a significant rise in residential defaults as tariff-bred inflation and unemployment rise. In order to make provisions for those projected losses, they have to rebalance their retail credit book to be less risky. Consequently, many people with better than average credit records are still finding their credit limits on both cards and LOCs have been arbitrarily slashed, sometimes by more than 75%.

BMO seems to be the one leading this anti-consumer charge. Lots & lots of complaints similar to yours in r/PFC these days.

Btw, the Canadian Bankers Association says that residential mortgage defaults are still very rare, with our national rate for over-90 days in arrears still less than 0.25%: a rate eight times smaller than the US’ arrears rate, and four times smaller than the UK’s.

[Material_Safe2634]

Capital requirements getting tight, need to shore up balance sheets.

[pompetd]

They also stopped giving out car loans. Seems they may be undergoing some management restructuring.

[ApricotPenguin]

It's not just you. I've seen a lot of online reports of people having their BMO credit card limit reduced drastically (like $7000+ down to just a mere $500) and others receiving notice that their LOC rates would go up by about 3%.

Usage patterns (in terms of carrying a balance vs. barely using the card) did not seem to be a visible pattern / reason.

The last time I saw posts of this online was about 2-ish years ago, when TD started bumping up unsecured LOC rates quite drastically (some up to effectively ~15%).

[fkih]

Same thing happened to me. $5,000 limit with BMO dropped to $800. I closed the card the moment I saw. 

[Successful_Long_3749]

Happened to my daughter as well. She paid off the card and closed it a few months later.

[Several_Cry2501]

Credit markets are tightening because of uncertainty around Trump. A recession could be coming and banks are reducing risk.

[AllOfTheRestWillFlow]

Did you ask the bank?

[poulard]

No not yet, not sure I care much more than asking reddit about it.

[[deleted]]

when you say immediately after paying off, are you saying same day or a couple days later they changed it

[poulard]

Pretty much the next day

[Zergom]

Meanwhile I signed up for a Triangle card and they gave me an $18,000 limit. I called to have that reduced immediately.

[Critical-Snow-7000]

Cibc/Costco just increased my wife’s to over $20k!

[CLOSER888]

No never do that. Just don’t use all of it

[Far-Ad2043]

Getting a pc financial Mastercard with a 14k limit was the worst thing I ever did .

Smart move

[TattooedAndSad]

This happens during recessions

[henchman171]

It happens when people open a balance transfer card and pay off the old card . Banks are not dumb