American Express Membership Rewards - Is Voluntary credit line reduction on credit cards beneficial?

Recently I opened an AMEX Delta SkyMiles card as well as a Citi AAdvantage Visa card because both of them waived 1st yr fee and they offered 30,000 miles each with some minimum spending requirements.. I plan to cancel both after 6 months per advice that I've read on this forum. However, I'm a bit concerned at the size of these new credit lines relative to my historical credit lines with my 2 other non-miles cards.. Basically, with these 2 new cards, my total credit line has more than doubled, and I'm worried that this might adversely affect my credit when I apply for other miles cards, which I'm planning to do.

So I inquired with AMEX via their online message service about reducing my credit line down to $2,000.. they replied basically telling me "are you sure you want to do this? Because if we lower it, you'll have to re-apply to increase it. Please confirm what you really want to do". They were clearly trying to discourage me from reducing my credit line

So my question to you guys is, are there any downsides to voluntarily reducing your credit lines? Does it raise any red flags? Conversely, have any of you found it beneficial to reduce your credit lines on your credit cards? Has a reduction in credit lines helped you obtain more cards or other credit benefits? I don't need much of a credit line as I pay off my credit card bills in full each month.

Don't lower your available credit.

If you get denied a card because of too much outstanding credit elsewhere you want to reconsider at that point.

But the lower your available credit, the higher your utilizastion percentage, this reduces your score.. (using a greater proportion of your available credit doesn't reflect well on how well you manage credit, on the likelihood that you're using up all your credit and have fallen on difficult times, thus the likelihood of default...)

They gave you this credit line, whatever it is, for a reason. Amex isn't usually generous, they don't think it's a problem.

I have huge outstanding credit lines, they grow over time, this is natural and not a problem.

Now Amex may not want to give you much more credit but you can have them reduce another credit line at the point you need them to, why do it speculatively and proactively?

Bottom-line is I wouldn't.

Welcome to Flyertalk.

This is a complex issue with no answer that is right for every individual in every circumstance. Your instinct is right, one factor that a card issuer considers is the aggregate amount of your credit limits versus your income and other financial resources. However, this doesn't directly affect the calculation of your FICO (credit) score.

One factor in calculation of a FICO score is credit "utilization", the percentage of available credit used. This is computed by summing your reported balances and dividing by your reported limits. Lower utilization is better, which means higher limits are better.

However, it's more complicated than it seems. If your Citi card is a Mastercard World or World Elite (or VISA Signature) it has "no preset limit" and Citi will not report the revolving limit shown on the statement. Instead, the credit bureau may substitute the highest reported balance and use it in the calculation as if it were a limit.

It's also important to understand that paying your balance in full every month is invisible to the credit bureaux. They only know the amount of your balance on the date reported by the card issuer, typically the statement closing date.

I would not request a credit line reduction, and I would not cancel any card until I had tracked changes in my credit reports and scores for a period of time to see how each account is actually reported and how the reported balance fluctuations affect my score.

gleff/mia, thanks for your advice. I think what you both say makes a lot of sense, especially the idea of tracking my credit reports before making any changes. You make a good point that percentage of credit utilization would actually decline (a good thing from a credit reporting standpoint) if my credit limits go up while spending patterns remain the same.

+1 to Gleff. Another factor: I recently was turned down for a credit increase on one AmEx card, but they let me transfer the available credit from another AmEx card. They used to do this automatically upon request (ended this practice recently), but they'll still do it on a case-by-case basis.

However, it's more complicated than it seems. If your Citi card is a Mastercard World or World Elite (or VISA Signature) it has "no preset limit" and Citi will not report the revolving limit shown on the statement. Instead, the credit bureau may substitute the highest reported balance and use it in the calculation as if it were a limit.

I thought the CRA report "no pre-set limit" accounts differently from the way they report revolving accounts.

By just reporting the highest amount charge, it can screw up someones utilization ratio. I wish the CRA would be more consistent, but thats another topic.

Never ever lower a credit line!

I guess AMEX really is tightening up on the credit lines. I have a generous Starwood credit line and have never had a problem spending on my AMEX credit card products. Last summer I got a DL Gold AMEX just to take advantage of the 40K signup miles. They gave me a measely $5k credit line. Now that NW merged into DL Skymiles, I decided to pay for the DL Reserve card for the extra upgrade priority. AMEX said no problem and changed the account, but now I realize my DL Reserve is now sitting there with the same $5K credit line I had as a gold. (Not sure if AMEX would have given me a higher credit line, had I applied for DL Reserve from the start, but I wanted the 40K sign up bonus for gold.)

This week I had to take a last minute international trip and ended up stuck paying $8900 for DL business elite on the route I flew. I can't believe AMEX issues a DL credit card where I have a credit line so low I cannot charge an individual airline ticket on it. In my case, I charged the ticket to Cent as an avenue to net some bonus points for the DL ticket. Well, I guess sometime I'll call and ask for a credit line increase. Since I don't really plan to use the card other than for the status and occasional bonuses, I suppose the limit is only a minor nuisance. It's just with the DL Reserve bonus miles for DL purchases, the one time I'd want to use the card is when I'm buying a DL ticket.

The good times are over. Amex will NOT raise your limits easily.

Best is to call them and ask them to take money out of your checking account in advance, which they will do for free, with a supervisor help, or just push the money from your checking acct, or send in a check after copying your old statement.

There were cases of fraud where people would send in large checks, charge the earth and disappear, and the checks woud later bounce, so Amex does not like it, but at least they will add the credit to your line available, which is more than Citi or BofA or Chase or juniper will do for you.

I guess AMEX really is tightening up on the credit lines. I have a generous Starwood credit line and have never had a problem spending on my AMEX credit card products. Last summer I got a DL Gold AMEX just to take advantage of the 40K signup miles. They gave me a measely $5k credit line. Now that NW merged into DL Skymiles, I decided to pay for the DL Reserve card for the extra upgrade priority. AMEX said no problem and changed the account, but now I realize my DL Reserve is now sitting there with the same $5K credit line I had as a gold. (Not sure if AMEX would have given me a higher credit line, had I applied for DL Reserve from the start, but I wanted the 40K sign up bonus for gold.)

This week I had to take a last minute international trip and ended up stuck paying $8900 for DL business elite on the route I flew. I can't believe AMEX issues a DL credit card where I have a credit line so low I cannot charge an individual airline ticket on it. In my case, I charged the ticket to Cent as an avenue to net some bonus points for the DL ticket. Well, I guess sometime I'll call and ask for a credit line increase. Since I don't really plan to use the card other than for the status and occasional bonuses, I suppose the limit is only a minor nuisance. It's just with the DL Reserve bonus miles for DL purchases, the one time I'd want to use the card is when I'm buying a DL ticket.