Card issuers such as American Express have started taking a closer look at the math that determines how much credit is available to each customer, and some are cutting their credit lines to keep more money in house. Card issuers want to keep default rates as low as possible to protect their profits.

Credit-card companies retain the right to change the terms of their agreements, particularly if a customer defaults. By law, issuers must inform cardholders of any changes to their account. The problem is that while most consumers receive notices as part of their monthly statement, many cardholders focus on the payment portion and either ignore or discard the message inside.

It is always advisable to read all the fine print in statements and in letters from credit-card companies. Consumers also argue that the issuers’ seemingly abrupt credit limitations can unnecessarily cut off consumers’ spending power. And, by changing those terms without looking at the customer’s circumstances, credit-card companies are freezing customers’ access to credit they had been awarded.

In order to prevent credit limit being reduced, consumers should pay the credit-card bill on time. Always pay more than the minimum requirement. Although it seems like easy free money, credit cards are actually short-term loans that often have steep monthly interest charges, which is typically 36%p.a.

Always try and repay as much as you can quickly to get that loan off your books. Also, cardholders should never use more than 50% of their available credit, even when money is tight. These days, appearing fiscally irresponsible can lower your credit limit.
Hence keep a tab while using your credit card.It may seem the most easiest and convenient mode of payment but it could cost you alot more.So be careful while using your credit card.