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It’s always good to have a good amount of cash saved away in your savings account. Banks have been reducing credit limits since the Great Recession, and we have seen several banks across the nation follow suit. According to Todd Mark, a vice president for Consumer Credit Counseling Service in the Dallas area, he has seen a lot of credit card issuers unexpectedly cut borrowers credit line without warning.

Banks have always had this power, but have been using it more recently as they adjust to the Credit CARD Act of 2009, which seriously cut credit card issuers funding. Because of this credit card issuers are looking for new ways to get money out of the consumer, including charging monthly debit card fees. Banks have begun cutting the credit lines of consumers who aren’t making them a lot of money.

If a credit card issuer cuts your credit card spending limit it can be detrimental to your finances in a couple of ways.

Many people use their credit cards for emergencies, but if that spending limit is cut then that consumer will have less available credit for emergency purposes. Even if an emergency isn’t imminent, a cut in your credit line can cause headache, because you don’t have original resources available. You can go out and look for another credit card to fill the monetary gap, or you can rely on your savings. But it’s always good to have some money in savings as well as a couple credit cards with high spending limits.

After a credit limit is cut, the consumer may make some rash decisions and sign up for the credit card nearest to them. Don’t do this. Like other credit cards, take your time and search through offers before signing up for another card to fill that credit gap.

In addition to putting the consumer in a state of panic, a drop in a credit card consumers spending limit can be detrimental to their credit score. Credit reporting agencies calculate the amount of available credit versus the amount of credit used. So, if you have a $10,000 spending limit, originally, and have spent $3,000, your credit score should be pretty good. But if your credit card issuer, drops your credit limit to $8,000, and your debt is still at $3,000, you have spent over the recommended 30 percent of your spending limit, and it can send your score sinking.