Consumer complaint received 2016-10-08
Product: Credit card — 
Issue: Credit line increase/decrease — 
Company: UNITED SERVICES AUTOMOBILE ASSOCIATION (NY)

Four years ago I opened a secured credit card with XXXX, for the SPECIFIC PURPOSE of improving my credit score. 

Initially it had a credit limit of {$500.00} and was secured with a {$500.00} CD, also with XXXX. 

In practice I found that if I put a XXXX dollars on the card my 'credit utilization ' ratio became too high, hurting my credit score, so I called XXXX and increased the CD security to {$2500.00} so that in any given month my % of credit used would be low. 

XXXX was able to increase the limit on my secured credit-building card in a matter of minutes. They quickly transferred money from my checking account to the CD - very easy and smooth, but with no warning of what lay ahead ... 

After four years I called XXXX to see if my credit was good enough to 'graduate ' the secured card to an unsecured card ( which is the industry norm ) thereby releasing my {$2500.00}. I was told that XXXX does not graduate cards, but that I should apply for a new card, which I did successfully. 

Now, a CRITICAL factor in credit is the length of the history of credit. Because of financial difficulties in 2010 many of my older accounts were closed, so it is vitally important to building my credit that I keep open the accounts that I have to build history. 

XXXX helpfully provides a credit score along with key factors influencing it. It says : " What 's Hurting : Lack of sufficient credit history. 
What It Means Your credit file does not contain enough information about your use of credit. A credit file with older accounts and/or more accounts reflects more experience with handling credit and can have a positive impact on your credit score. 
Recommendation : Maintaining open and active credit accounts in good standing can help improve your credit score. '' In other words, XXXX OWN advice is that it is critical that I keep OPEN the secured card they gave me to help build my credit. 

However, now that I have an unsecured card with a line of $ XXXX it would be poor financial management to keep {$2500.00} needlessly tied up earning near-XXXX interest to secure a line of credit I no longer need. 

Clearly I should keep the secured account open with a reduced limit - say {$200.00} - so that it remains functional and contributes to my credit history, but releases the money I had tied up securing it. 

I called XXXX today to reduce the credit limit on the secured card and they will not do it. I spent an hour speaking to a number of representatives and escalating the matter as far as possible. 

They are absolutely clear : 1 : I can not graduate the secured card to release the security deposit held in a CD 2 : I can not reduce the credit limit and reduce the amount in the CD. The CD can only be increased, or closed. 

3 : If I close the CD the secured card account will immediately close DAMAGING MY CREDIT IMMEDIATELY by reducing my credit history 4 : They can not or will not allow me to open a new smaller CD to secure the card thereby allowing the {$2500.00} CD to be closed. 

Trying to be helpful I even asked if they would change the terms of the secured card to, say 0 % interest and 0 % minimum payment, which ( although it sounds absurd ) would have the effect of giving me back access to my {$2500.00} without penalty. No. 



THE BOTTOM LINE XXXX has effectively set up an extortion whereby the only way to get back the {$2500.00} I entrusted to them to help build my credit ... is to take a massive and permanent hit to my credit. 

This is very important. Many credit injustices - bad reporting, erroneous missed payments etc - can be fixed on appeal. 

But CLOSING a line of credit is a permanent and irreversible negative factor on an account - as even XXXX agree. 

The choice of hurting my credit or never having access to my {$2500.00} again ( other than on credit card terms ) would be completely unreasonable and unacceptable at any bank, and utterly against XXXX 's character.