Known as balance chasing, banks have shown their complete and utter disregard for rebuilding the American economy by chasing down credit that was once approved for their customers. It is hurting the middle class by lowering their credit scores even though they have never missed a payment.

How well you pay your bills is just one part of your credit score, accounting for 35% of your score. 30% of your credit score is tied to the amount you owe as it relates to the amount of credit that has been extended to you. For instance, if the bank had granted you a credit limit of $10,000 and you used only $1,000, your debt to credit ratio would be a very credit-worthy 10%.

Chasing down your balance means that the bank changes your credit limit from $10,000 to $1,000 or, perhaps, $1,200. Your new debt to credit ratio is a shaky 81.25% Instead of the 10% ratio showing you know how to manage your credit, your credit report now shows the high ratio that flags you as a credit risk. Your credit score drops, and it becomes harder for you to get a loan of any kind.

I was talking with a friend about this the other day whole shared his story. He had a credit card with Bank of America that had a $9,000 limit. His balance was $0, and it had been $0 for a number of months. Bank of America notified him that his credit limit had been lowered to $500. Believing that $500 doesn’t mount to a hill of beans on his debt to credit ratio, he cancelled the card.

A couple months later he got a similar letter from Chase Bank. While normally maintaining a $0 balance, he had recently purchased items for a client for which he would be reimbursed. His balance when he received the letter was $1,400. He was informed that his limit had been lowered to $1,700 based on a check of his credit report. Again, he had always made his payments on time, when he had payments.

A New Credit Card Strategy

My friend is now working on a new financial strategy that doesn’t rely on banks he’s dealt with for years. He is moving his personal and business checking accounts away from Bank of America to a bank that did not beg the federal government for taxpayer assistance while putting the screws to those very taxpayers. Next, he is getting a Prepaid Credit Card (also known as a Prepaid Debit Card) that he will use in the future. In other words, he will begin loaning money to himself.

Now, of course, everyone is not in a position to immediately do that. But it is a plan that could develop quite a following, and I hopd it does. Click here for more information about Prepaid Credit Cards.

Definition: Balance Chasing [Credit Cards] – Balance chasing is a practice credit card companies are using to reduce their risk, find out what it is and what you can do about it. Balance chasing is when the credit card company cuts your credit… [[ This is a content summary only. …

TheyBannedMe.com – The Home of the Banned » Blog Archive » Bank of … – Limit chasing is the practice by which the card issuer lowers your limit to slightly above your balance whenever you make a payment. Can Bank of America legally engage in muggings such as this? Unfortunately they can (assuming they had …