Capital One Raising Credit Card Spending Limits?

At least they are, for me. I’ve had a Capital One credit card since 2003, and the credit limit has always been the same: $5,000. Yesterday, lo and behold, I got a letter from the company essentially telling me, “Hey, we doubled your limit to $10,000! Go spend!”

I find it extremely odd, given just a few months ago, credit card companies were tightening their belts in the face of the recession, dropping spending limits and customers who weren’t actively using their cards. Not only did Capital One warn me that my interest rate will rise in January 2010 (conveniently, less than 3 months away), I have a credit card company cut my limit in half, from $30,000 to $15,000 (granted, I didn’t reach anywhere near either limit, EVER), and I had Chase outright cancel my card due to inactivity.

Originally, I was concerned about how the closed card and the reduced credit limit would affect our house-hunting — would banks give us a higher interest rate because of a less-favorable debt-to-credit limit ratio, despite excellent credit? Luckily, we didn’t have to worry about that.

Now, knowing our Capital One card will raise rates in January, I’ve been on a tear to pay it off by then, and it’s looking good for January being the final payment toward that debt. That would leave us with one card left to pay off. I’ve been throwing less at it because the balance is at 1.99% interest, and focusing on the Capital One card, which has been fluctuating monthly from 9.9% to 11.99%.

So what’s with the loosening of credit lines? I figure companies would still be reducing available credit to customers.

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