Synchrony Decreased My Credit Limit

[markbeiser]

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@PhilL wrote:

Across all cards?

Why would they do a closure or any adverse action if you make on-time payments?

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Your recent financial behavior triggered an algorithm that initiated adverse action against you, which could cascade to other lenders.
Banks are skittish because default rates have been trending up, and there are currently some not good economic indicators.
People carrying high credit card debt, and only making minimum payments, are seen as being at elevated risk of defaulting.
It is based on historical statistical data, and is entirely automated.

[Kforce]

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@PhilL wrote:

Will action be taken against me on my cards with other banks?

Unknown but maybe

What should I do in response to this?

You have to pick what to pay down first and how much.

Decide what is most important

Scores, money or lower chance of AA on other card/cards.

&

I've read with Balance Chasers that you don't want to pay it all off immediately.

If this card is less important and you want to maybe save another from AA,

funds might be better spent on another card.

&

 I am carrying significant balances on three or so other cards.

I have only recently made the minimum payments on Venmo and the unrelated other accounts.

That said, I have a 100% on-time payment record across all my accounts and no derogatory info against me. 

Making minimum payments and having high utilization is a red flag for most issuers that someone is having financial problems.

100% on-time payment record across all accounts and no derogatory info does not negate the above danger.

 All issuers dislike minimum payments for many months and high utilization.

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 If wanting to save money pay down high interest first then move down

If wanting to maybe save a card you really like put all extra and higher payments to that card.

If wanting to help score, would need exact numbers and more info to help. 

(I would pick saving money or saving my favorite card)  

[PhilL]

Just curious what's an "AA"?

[Jnbmom]

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@PhilL wrote:

Just curious what's an "AA"?

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Adverse action 

[SouthJamaica]

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@PhilL wrote:

I have a Venmo Credit Card, which Synchrony Bank services.

The other day, I received notice in an official letter that Synchrony was decreasing my $4,000+ credit limit to only a few dollars above my balance.

They said the balance amount to the credit limit is too high and that the payment amounts over the past several months were too low, among other factors. 

That said, I don't heavily use this particular card often and have a consistent on-time payment history with all my accounts.

My main question is:

What is going on? Will action be taken against me on my cards with other banks?

What should I do in response to this?

Thank you in advance for your opinion

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Synchrony has been frequently lowering peoples' credit limits during the past couple of years. I personally believe it has more to do with Synchrony's own financial problems than with anything about you.

I do not think it should spill over to your other lenders, although it probably would spill over to other Synchrony cards if you have any.

[SouthJamaica]

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@PhilL wrote:

I've read with Balance Chasers that you don't want to pay it all off immediately.

Do you know if this is true?

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I don't agree with that; I think it's better to pay it off and get them off your case.

[SouthJamaica]

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@PhilL wrote:

Across all cards?

Why would they do a closure or any adverse action if you make on-time payments?

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That's a good question. No one knows why. But my theory is they do it to make their financial statements look better by decreasing loan loss reserves.

[pizzadude]

Lenders have various approaches to managing risk - some like Synchrony are very trigger happy and have been known to chop / shutdown accounts with no notice and / or apparent reasons. 

[biznob]

when Covid hit they closed about 10 of my accounts.  Many i didnt use.  No changes to my profile, utilzation etc...

I bought a new house mid covid and used some of the funds from the sale of my prior house to pay off all debt.

When i submitted an address change request, they closed another 10 of  my accounts.  Most i rarely used.  whats funny is i overpaid two accounts (amazon and sams) so they owed me quite a bit of money at the time as they credited the accounts due to the double payments.  

No changes to my credit as i was in the closing process.  My  utilzation has always been 1-2%.  Nothing bad, no changes in income or job, and score was going  up slowly.  

Anyhow, i had just recently gotten a CLI on several.  I was a CLI seeking junky every 2-3 months.

I have one Synch card they didnt close (venmo).  It has gotten regular CLI's without issue.  I get Preapprovals all the time from anywhere i go offering synch cards.  Refuse to get another synch card.

[BuckyB]

You had 20 Synchrony cards? 😦