whenever they want.
They send a notice via snail mail. If you don't read the notice, you can end up being heavily penalized in fees and your credit score.
They reduce it to whatever they want. Let's say your limit is $9000 and your balance is $5900. They can reduce your limit to $6000 and charge you over $100 in fees. They can also just reduce your limit to $5000 and screw you that way.
Sneaky bastards.
In crisis, banks pullback consumer credit card limits - Sep. 26, 2008