Credit Limit Halved - What do I do

enigma368

I received a letter from Barclaycard today saying that my credit limit is being reduced to £260 from £500, in order to prevent me from "running the risk of problems building up later".

I have had the card since June and while I have come close to the limit a few times, I have never exceeded it and have without fail, paid off the full balance every month. The current balance is zero. The only thing I can think of is that I just changed address.. I'm a bit confused as to why they are doing this, but I will phone them Monday.

Anyway my question is, with regards to my credit rating/report, how bad is this going to look, having my limit reduced? I dont really need the credit that badly so am I better off, from a credit rating point of view, cancelling the card immediately?

izools

enigma368 wrote: »

I received a letter from Barclaycard today saying that my credit limit is being reduced to £260 from £500, in order to prevent me from "running the risk of problems building up later".

I have had the card since June and while I have come close to the limit a few times, I have never exceeded it and have without fail, paid off the full balance every month. The current balance is zero. The only thing I can think of is that I just changed address.. I'm a bit confused as to why they are doing this, but I will phone them Monday.

Anyway my question is, with regards to my credit rating/report, how bad is this going to look, having my limit reduced? I dont really need the credit that badly so am I better off, from a credit rating point of view, cancelling the card immediately?

What !!!!!!. If you've never incurred a fee on the account and always paid in full they probably want you to leave as you aren't making them any money.

Upto you what you want to do, if you have no adverse credit take your custom somewhere it will be valued; MBNA perhaps? If you've got limited history you could try their "Classic" card, I did when I was 18 and was approved with a £1,000 limit.

enigma368

If you've got limited history you could try their "Classic" card, I did when I was 18 and was approved with a £1,000 limit.

I do have a limited history as I have only been in the UK for two years(Im Irish). And this is their Classic card. The whole point of getting it was to build up a decent credit history, which is why I was being so careful and paying it off in full each month. Now they are screwing me over, even though I have done everything by the book. I cant seem to win...

jhow

To build up the credit rating you should use the card for a few small purchases a few times and only pay a part of it off on a monthly basis because thats the way they like it. They will then increase the limit if you phone and say something like you are going on holiday and need a bit of extra credit in case you get stranded. Failing that get another card and use it a few times, but do not pay it off in full because they are not making any interest, so they dont like that. You build up the credit rating when you pay them little and often, kind regards, Jo.

enigma368

do not pay it off in full because they are not making any interest, so they dont like that.

I dont see how reducing my credit limit is going to make them any more money. If I am paying it off in full when its £500, whats reducing it to £260 going to do. And they still make money from every purchase I make, so reducing my limit is just going to reduce the amount of money I spend on purchases. With respect, your theory makes no sense in this case.

Paul_Herring

but do not pay it off in full because they are not making any interest, so they dont like that. You build up the credit rating when you pay them little and often,

Doing this is expensive, and does nothing for your 'credit rating.'

bingy_burge

so with my barclay card i have to allow them make some interest rather than pay in full every month. They said after 6 mnths they will up my limit.

Daisy_Duck

jhow wrote: »

You build up the credit rating when you pay them little and often.

No, you don't build up your credit worthiness by doing this at all.
You just need to show that you have used the accounts you have within the terms you agreed.
If you pay off in full every month you will continue to have positive info fed to the CRAs and won't be paying any interest.

enigma368

Anyway back to the original question. Does anyone know if I should keep my credit card or cancel it before they report the reduced limit to CRAs? Is it going to make a difference either way? Is there any chance Barclaycard would re-consider their decision if I appealed it?

Treadmill

A reduced credit limit won't affect your score as long as you stay within it, They might consider the decision if you clear the balance and threaten to cancel.

mark55man

for what its worth I was told that overpaying was more use than minimum payments. i think the earlier posters are correct - if you don't go outside the terms of your deal (whatever they are) you will not harm (and probably improve) your score

even if you are using your card and paying it off they are making money out of it, as they will get 2-3% of each transaction