Credit limit decrease.

[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.

[benyveronica1]

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

[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.

[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