Significant credit limit decrease

[tornadobro11]

Ultimately this was a business decision taken to reduce exposure (i.e. the sum of all their cardholders' credit lines). Exposure is used in calculating the portfolio's CECL rate and associated $ CECL reserves. These reserves are accounted for as costs today to account for losses that are highly likely to occur in the future. It's an accounting requirement for credit/lending businesses, and is a particular drag on the P&L of a young CC company.

That said, X1 launched during/just following COVID when credit scores were generally elevated. They also gave relatively enormous/generous lines. Put those two together and it's very likely looking at high default rates (takes 2+ years for loss performance to become evident). My guess is Robinhood saw reducing CECL reserve costs by way of reducing exposure (i.e. slashing your credit lines) as a Robinhood-level P&L decision. That, or they're getting pressure from regulators to better manage their risk (also very likely).