Damned if you do, and damned if you don't

hansi

I have a Co-op Visa card which I have had for about six months as a standby card so I haven't actually used it yet. On Saturday, I had a letter from Co-op advising me that as I haven't " taken the opportunity to make use of my available credit limit to date, we have now reduced your credit limit to £xxxx, as we cannot be sure that the information we hold about you is up to date, and to avoid fraud on my account." What??????

If there was any change in my details, I would have advised them.

It's crazy, they want you to spend and incur interest charges (which I never do) and when you don't they reduce your limit!. Anyway, they can keep their card, I'm writing to cancel it today. :mad:

IWantToBeFree_2

Many lenders are cutting limits on cards which are dormant, this reduces their exposure. If you don't spend on it I don't see what your problem is.

hansi

Like I said, it was a standby card, if I had a problem with my usual card.

Moggles_2

Credit card companies aren't there to help you and me. They're there to make money.

It makes sense to have a back-up card (particularly if work involves frequent travel away from home), but I can't help wondering why you've kept a credit card purely as a stand-by card.

Wouldn't you be better off setting some cash aside each month in a no-notice cash ISA? In the time it takes to build a credit rating, research the market and apply for another card, you could have an emergency cash fund, which is free to use.

I love my credit cards. Used sensibly, they can save you loads, but you do have to use them in order to reap the benefits.

chattychappy

I'm with the OP. A credit card offers a line of credit which you may or may not require from time to time. You use it to shop for big purchases, emergency cash, or general shopping.

Yep they're in business to make money - when you make that big purchase they get the commission, plus some interest perhaps. And they make even more if you draw cash. Having credit available encourages an impulsive purchase - without the fuss of getting a personal loan, applying for HP etc. Knowing you have a credit line means you don't have to plan for a rainy day. Unlike overdrafts (which are supposedly repayable on demand), a credit card limit seemed more permanent and reliable.

If limits start getting cut so they effectively "hug" what you're currently spending, then they are reducing the opportunity to make money out of additional spending. If you can't rely on your limit being there from month to month, then consumers will find other solutions - savings perhaps - to plan for the unexpected.

It seems at the moment the CC companies are more concerned about maximising profit through minimising exposure to debt rather than providing the kind of product I thought credit cards were.

Things got out of hand before, and an adjustment was needed. It just seems they are not going about things in an intelligent way (what's new).

savagej

chattychappy wrote: »

I'm with the OP. A credit card offers a line of credit which you may or may not require from time to time. You use it to shop for big purchases, emergency cash, or general shopping.

Yep they're in business to make money - when you make that big purchase they get the commission, plus some interest perhaps. And they make even more if you draw cash. Having credit available encourages an impulsive purchase - without the fuss of getting a personal loan, applying for HP etc. Knowing you have a credit line means you don't have to plan for a rainy day. Unlike overdrafts (which are supposedly repayable on demand), a credit card limit seemed more permanent and reliable.

If limits start getting cut so they effectively "hug" what you're currently spending, then they are reducing the opportunity to make money out of additional spending. If you can't rely on your limit being there from month to month, then consumers will find other solutions - savings perhaps - to plan for the unexpected.

It seems at the moment the CC companies are more concerned about maximising profit through minimising exposure to debt rather than providing the kind of product I thought credit cards were.

Things got out of hand before, and an adjustment was needed. It just seems they are not going about things in an intelligent way (what's new).

I agree totally. I know there is no obligation to lend, but when you are given a card and a limit and your financial circumstances dont deterioate you should be allowed to feel you have some security in relation to your finances. It helps with planning for the future and much more.

dfh

Yes-I agree with the above.I would like a standby card for a big purchase or an emergrncy.It may be a lifeline during an emergency.

CLAPTON

How difficult is it to use both cards a little and so avoid the hassle? Say petrol once a month on the back up card?

Moggles_2

CLAPTON wrote: »

How difficult is it to use both cards a little and so avoid the hassle? Say petrol once a month on the back up card?

You may find budgeting easier when you ring-fence certain expenditure in this way.

Alternatively, consider shopping with the card with most interest-free days to run, then switch once the other card's monthly statement is produced