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Question of the week: reducing credit limits
Former_MSE_Guy
Posts: 1,650 Forumite
Q. If you have a credit card with an £8,500 limit, for example, is a lender then allowed to then send a later stating it has reduced the limit to, say, £3,500? If it also states it made the change after carrying out a search on my credit file, can it really make the check even though I haven't agreed to it?
A. The answer to both parts of the question is 'legally yes morally no'. When you sign up for a credit card, most lenders state in their terms and conditions that they can reduce your limit, as long as they give you 30 days notice. Outrageously, they can also reduce your credit ceiling to a level below your current balance, immediately putting you over your limit.
A lender can also search your credit file whenever it chooses, although there are different types of enquiry, some for lenders benefit and some for yours. In this case the type of search is likely to have been an 'unrecorded enquiry', meaning it can only be seen by you and not other lenders, so searching your file in this way will not harm future applications.
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A. The answer to both parts of the question is 'legally yes morally no'. When you sign up for a credit card, most lenders state in their terms and conditions that they can reduce your limit, as long as they give you 30 days notice. Outrageously, they can also reduce your credit ceiling to a level below your current balance, immediately putting you over your limit.
A lender can also search your credit file whenever it chooses, although there are different types of enquiry, some for lenders benefit and some for yours. In this case the type of search is likely to have been an 'unrecorded enquiry', meaning it can only be seen by you and not other lenders, so searching your file in this way will not harm future applications.
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Comments
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My credit card company reduced my card limit from £3,800 to £1,000. It reduced my limit but I didn't receive the letter till 3 days after they had done this. So they didn't give me 30 days notice, is that illegal? Had I not of checked my online statement before I went for my monthly shop my card would have been declined as it only left me with £122.0
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krisanddan wrote: »My credit card company reduced my card limit from £3,800 to £1,000. It reduced my limit but I didn't receive the letter till 3 days after they had done this. So they didn't give me 30 days notice, is that illegal? Had I not of checked my online statement before I went for my monthly shop my card would have been declined as it only left me with £122.
They don't tell you prior so that you can't go out and use all the available credit before it is withdrawn. Sneaky!Got Halifax Classic to reduce my interest rate by 5% woohoo - 10/06/08 Thanks MSE!
Another 3% shaved off 10/12/08
ANOTHER 4 % June 09:beer:0 -
My old Barclaycard - was doing this every six months. Reducing from £2.5k down to £800.00.
My credit files are perfect - no missed or adverse. Had been with them for over ten years.They said they were worried about my exposure.
I voted with my feet and closed.0
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