HONOLULU (KHON2) — Honolulu residents are experiencing notable decreases in their credit limits. According to a new study released on June 5, Honolulu ranks second amongst cities in the United States where credit limits are decreasing the most.
The average credit limit for accounts opened in the first quarter of 2025 decreased by approximately 35% compared to the same period in 2024, according to the report.
Additionally, the study found that there was a more than 17% decrease in the average credit limit overall between March 2024 and March 2025.
Understanding the impact
A decrease in credit limits can affect residents’ financial flexibility.
“When a credit card company lowers your credit limit, it’s a good idea to adjust your spending,” said Chip Lupo, an analyst from the study. “Charging the same amount with a reduced credit limit will result in increased credit utilization, which can be detrimental to your credit score.”
Increased credit utilization can negatively impact credit scores in such a way that it makes managing finances more challenging.
Credit utilization explained
Credit utilization refers to the percentage of available credit being used. A higher utilization rate can signal to lenders that a borrower may be overextended financially.
Hence, maintaining a lower credit utilization ratio is generally viewed favorably by credit scoring models is an important aspect of managing your credit’s overall health.
4 strategies to manage reduced credit limits
To mitigate the effects of reduced credit limits, residents can consider the following strategies offered that are offered by the report:
1. Utilize multiple credit cards:
Using more than one credit card can help you keep your balances low, which is good for your credit score. Some cards offer better rewards for certain purchases or stores. Many big retailers have their own cards with special rewards and are usually easy to get.
If your credit limit drops, you might think about opening a new card; but that’s not always z smart move, especially if the drop happened because of missed payments or a lower credit score.
It’s important to use credit wisely so you don’t hurt your score or end up with too much debt. It’s also important to understand how big store credit cards work since utilizing this strategy is a bit risky.
2. Pay bills frequently:
To keep more of your credit limit open, try paying your credit card bill several times a month. This helps keep your balance low and lowers the chance of your card being declined. It also helps your credit score by keeping your credit use low.
It might not always be easy to do, but it’s a smart way to manage your credit. Making multiple payments throughout the month can help keep balances low and prevent maxing out credit limits.
3. Request credit limit increases:
If one of your credit cards lowers your limit, you can ask your other card companies to raise your limits. If you’ve made payments on time and have a good credit score, they might say yes. This can help your credit by lowering your credit use.
But asking for a higher limit might cause a hard inquiry, which can lower your score a little. If you need a high score soon, it’s better to wait. Paying on time and using only part of your credit limit can sometimes lead to an automatic increase without a hard check.
This is a safer way to grow your limit and help your credit without hurting your score. Always try to use credit wisely.
4. Monitor your credit score:
Watching your credit score is important because big changes could mean something is wrong with your money habits or credit history. Checking your credit score helps you see what you can do better and fix any problems.
It can also help you understand why your credit limit was lowered. You can sign up for free credit score checks and credit monitoring with WalletHub. They also give tips, tools and reasons why your score went up or down.
This helps you stay on track and improve your credit over time. Staying informed is a smart way to keep your credit healthy and avoid surprises. Keeping an eye on your credit score can help identify areas for improvement and make necessary changes to improve your credit situation.
You can click here to read the full report.
The significant decrease in credit limits in Honolulu underscores the importance of managing credit responsibly. By understanding credit utilization and implementing strategies to maintain a healthy credit profile, residents can navigate these changes more effectively.