Reduction in Credit Limit. Good or Bad?

I have finally reduced my credit limit for my credit cards from Citibank to $2000!!! Actually I am thinking of reducing it to $1000 but I guess $2000 is a better number. I may consider to reducing it further down to $1000 in near future.

I guess majority of the people would want to increase their credit limit to sky high amount for whatever reason rather than reducing it, I also have this kind of mentality before. The reason for reduction in credit limit is because I want to reduce my chances of impulsive buying of big ticket items.

I found out that the higher the credit limit, the bigger the G monster is. G = Greed.

Sometimes when I see an item that cost a few thousands, the G monster inside me would try to convince me to buy it as I have ability to pay the monthly installment. And the internal fighting begins.

Now with the lower limit, I guess I can safely avoid this scenario altogether.

I wrote to Citibank using secured email requesting a reduction in credit limit and they replied

“To enable us to review your request to reduce your credit limit, please send us a signed letter of request.”

So, I send them the letter as requested.

“To Person-In-Charge:

I would like to reduce the credit limit for my credit cards (Citibank SMRT Visa Platinum Card and Citibank DIVIDEND Platinum) to $2000 instead of the current credit limit.

Please close my ReadyCredit account with immediate effect as I will not be using it.

Thanks”

After 2-3 days, a guy called and double confirmed with the request, after which he processed the reduction. I checked my account and the limit is reduced but they didn’t process my request to cancel my ReadyCredit account!

The ReadyCredit account was easily cancelled after I called in to request for cancellation.

There you have it, a reduction in credit limit and one less unsecured loan account and less headaches.