It can be very worrying for a cardholder to find out that her credit card limit has been reduced. Here's what to do if that happens to you.

Many credit cardholders rely on their little piece of plastic to tide them over when they are temporarily short of funds. And why not – this instrument enables an individual to borrow money up to a permissible limit immediately, without the need to put up any collateral. Credit cards can be used to fund anything - vacations, household appliances, even a small business! That is why it can be very worrying for a cardholder to find out that her credit card limit has been reduced.

However, in such cases, all is not lost. Faced with this situation, a cardholder can take a few measures to ensure that she is not too adversely affected.

Communicate with Your Issuer

Perhaps the first thing you should do when you realize that your credit limit has been reduced is call your issuer. Sometimes card companies lower the available limit of consumers if they notice unusual spending behavior which may indicate increased credit risk or even identity theft. At times, it can even happen that due to an error in your credit report, the issuer has incorrect information about your credit history. Whatever the reason, in most cases, talking to a customer representative can solve the problem. A card issuer will usually reverse the decision to lower your limit if you have previously made your payments on time and in full. Even if you have missed payments due to unavoidable reasons, such as job loss, you can ask the card company to take your circumstances into consideration. If the customer representative is not able to help, ask for a supervisor. Make sure you are polite, yet firm. If you lose your cool, you may lose the chance to present your case as well. 

Transfer Your Balance

Sometimes the decision of a card issuer to lower your limit is not personal; it is simply because the company wants to reduce its overall risk. In these circumstances, they might be unwilling to restore your limit even if you’ve always had a stellar track record. In that case, if your credit cut puts you above your credit limit, you can try opting for a balance transfer to another issuer's card. Many card companies offer deals where, for a fee, you can shift your balance to another card. The new card usually offers 0% APR for a certain period during which you can pay off your balance. However, be alert while taking this route – if you don’t pay down your debt before the promotional period is over, you be may be asked to pay a very high interest rate. Moreover, do your calculations beforehand to ensure that the balance transfer fee, if any, is worth the savings on interest.

Pay Down Your Balance

If the above options do not work, you are left with no choice but to pay down the balance. To avoid a blow to your credit score, you must always keep your credit utilization ratio, i.e., the proportion of total available credit that you have used up, below 30%.

Keep Your Account Open

Whenever their credit limit is reduced, many consumers close their accounts. This is a step you should avoid. Even with a reduced credit limit, the account is still making a positive contribution to your credit score. Closing the card will not only reduce the average age of your accounts; it will also reduce your total available credit, thereby hurting your credit score. This, in turn, may lower your chances of getting a loan in the future.

Call Fund&Grow

Many cardholders are deeply inconvenienced when their issuer lowers their limit, especially if they had been counting on that line of credit to meet some specific requirement, such as providing a down payment on a property or funding their small business. For such people, Fund&Grow has a great solution - enabling clients with good credit to obtain as much as $250,000 at 0% interest. Available for a period of 6, 12 or 18 months, this loan does not require any collateral and can be used for any purpose.