Wallethub: Indiana Has 7th Highest Credit Limit Decrease

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Source: (Photo: Ingram Publishing/Thinkstock)

STATEWIDE–If your credit limit gets decreased on your credit card, that’s probably not something you want, especially with it being the holiday season. A new study from the personal-finance website, Wallethub, says Indiana has the 7th largest credit limit decrease on credit cards.

“A credit limit decrease can pose a challenge, by making daily purchases less convenient, disrupting your cash flow, increasing your credit utilization, and hurting your credit score. But it may also be an opportunity to improve your financial habits. Embracing this opportunity for greater fiscal responsibility involves careful budgeting and timely bill payments. By actively managing your finances within the revised limits, you can not only mitigate the short-term effects on your credit score but also cultivate healthier financial habits for long-term stability,” said Wallethub Analyst Cassandra Happe.

One of the factors hurting Indiana’s score is Indiana’s average credit limit per user, which is too high.

In order to determine the states with the most credit limit decreases, WalletHub compared the 50 states across two key dimensions. Those were average credit limit per user and change in average credit limit per user.

The state with the largest credit limit decrease was Mississippi.

“Residents of Mississippi had the largest average decrease in their credit limits from Q3 2022 to Q3 2023, taking into account all four components analyzed. This is due to the fact that they have the lowest median household income and some of the lowest credit scores in the nation on average. Although lenders in the state have been cautious over the past year, the good news is that it has resulted in smaller increases in household debt compared to other states. Despite facing significant credit limit reductions, Mississippians have the second-most sustainable credit card debt, indicating that they are able to balance their credit card debts with their income. This contrast between credit scores and sustainable debt practices highlights the financial resilience of residents in the state,” said the study.

Iowa had the smallest credit limit decrease.

Wallethub and other financial experts recommend that you use multiple cards instead of maxing out one card, pay your bills multiple times per month to keep more of your credit limit available, and monitor your credit score.