by Joseph Kenny | 09/7/09

In the past, the maxim doesn't leave home without your credit card was commonplace. The fast, convenient access to funds when you need them was a wonder. Today, however, the climate surrounding credit card use is much different. You cannot count on credit card limits to remain the same.

Banks and other financial institutions have reduced the credit limits for tens of millions of cardholders since the beginning of 2008. Different sources indicate that the majority of the limit cuts have stuck those users that have had no history of late payments or other negative penalties attached to their credit history.

Even though there are significant numbers of consumers complaining about the reductions, legislators in Washington did not see fit to address the issues during the formulation of the Credit CARD Act, the latest law enacted to bring an end to the abusive credit card company practices and providing a higher degree of consumer advocacy and information about accounts.

There is one specific provision that went into affect recent that requires banks to contact customers 45 days in advance of any significant changes that are planned for their accounts or if there are changes in the rates of late fees.

Unfortunately, credit limits did not get into this category; thus, they can be reduced without notification. One of the main reasons for this omission has to do with the fact that credit limits were never considered among the terms regulated in the past.

The new federal credit card law is just an update of the Truth in Lending Act, a law that was passed back in 1968, and which focused on providing consumers with understandable information about credit.

Other areas of contention during debates about the law involved issues surrounding "universal default" and other practices that allowed for massive increases in fees or spikes in interest rates. Such policies started showing up everywhere in recent years.

Credit limit cuts, on the other hand, are a product of the economic problems that grew out of the mortgage crisis and other types of lending.

A FICO report noted that in the twelve-month period ending in April, there were about 58 million people who had the available credit limit reduced on their card accounts. In fact, the number of reductions actually accelerated during this period. Just one-third of those cuts were made to cards with negative histories.

The reductions actually reflect a number of factors, from the complicated situation that the entire banking industry fell into after the economy melted down to the leap in unemployment during the past year.