Barclaycard Credit Limit Reduction ???

speedbird1973

langtoft_lad wrote: »

I do understand they have the right, I really do!
What I am failing to understand is the reasoning behind them exercising those rights.

I've now managed to access more than one page of search results and perhaps see that there is no logic behind their arbitrary decision making, perhaps it's just the Barclaycard Way?

Until I'm given a plausible reason otherwise - I shall assume its because they want to limit their exposure to the 1% cashback liability.
After all Citicard recently discontinued its 3% Shell and 1% Platinum

Although you're complaint is pointless.. I think the bottom line is the your credit limit is money they have to stash away. They can't lend it out twice.. so as you don't use it, they'll give it to someone who does. It makes them more money if they give it to a more profitable customer.

PJHilder

I've just found out today that they've decided to close my account after 4 years. £400 limit and paid off in full each month.

atomicsheep

They are not making any money out of you. THey are only intersted in making money.

I believe its the term "revolver" that comes to mind here. People who make minimum payment each month therefore incurring biggest interest over the long term.

I guess if you're clearing the balance each time and using teh interest free periods for doing so, then you are gaining from them and not the other way around. So you're of no interst to them.

oscar52

Atomic sheep has answered your question perfectly. You make them no money. In fact you probably cost them more in account maintenance than your accoutn creates.

I doubt (speaking from experience from working in MBNA) your complaint will get anywhere. As stated above, and which you have agreed, is that the bank can revoke and reduce your credit limit. They will never write to tell you this for obvious reasons (and in some cases such as bad debt, justified). If they had written to you saying "on 11 January, we are reducing your limit from £3K to £400, some people would just go out on 10 January and spend £2K (for example)

The response your complaint will (more than likely) get is that their lending criteria is "business sensitive" information that they are not prepared to divulge.

nickmack

If you pay very little or no interest, as commented above, you're not making them much if any profit.

Quite often you'll receive an ambiguous letter telling you to check your Credit Report and inferring it may be your fault but the bottom line is they're in the business of making money, so probably want to use that exposure for someone who leaves a nice interest earning balance each month. Of course it would be bad PR to come out and say this, but reading between the lines it's clear they don't value your custom.

udydudy

langtoft_lad wrote: »

Has anyone else experienced an arbitrary slashing of their limit without prior notice for no apparent good reason?.....
Has anyone else had this - without the obvious reason of either late payments or changes in personal/financial circumstances?.......
.

Had this happen to me by Barclays approx 2-1/2 yrs back. They reduced my limit from 8750 to 950 when I repaid my promotional balance except for the last £750. This was when the crunch hit US. No prior intimation a letter arrived a week later which said responsible lending blah blah blah.

I just took my custom elsewhere. Since then I refuse to use barclays unless they have the best savings interest rate than anybody else. their loss!!!. they lost my current account and all the cashflow and low interest that it generated for me!!!. :rotfl::rotfl::rotfl::rotfl::rotfl:


Now they send me promotional offers to apply for credit card and it all goes in the bin!!!


Recently Looyds TSB did a similar thing reduced the limit from 5000 to 4750 with a letter saying responsible lending. I did the same thing!! Closed the current account moved my Regular Saver after the end of the term.

at the branch When they asked me why I was closing , I showed them the letter and told themI was adopting the stance of "responsible borrowing"
and hence did not need their services anymore.!!

ofcourse I have other accounts so I could not care with these banks. if they cannot manage their credit assesment its their loss!!.

langtoft_lad

Ok - I now understand that I'm just lousy business for Barclaycard, and that's fine. It was just a bit of a shock to have my card declined over £15 worth of petrol... c'est la vie.

However, because of this less than honest (I've now received "the letter" saying they've checked the credit ref agencies - they haven't, at least no record of them doing so) business practice, I shall be sure to let anyone who's interested of my opinion of Barclay's & Barclaycard.

I'm sure someone can trot out the marketing cliches:
Costs 5x as much to gain a new customer as retain an existing one.
A disaffected customer will tell 5 others, who will each tell five others who will each...

Thanks all for your comments & insights.

Ritchie74

langtoft_lad wrote: »

However, because of this less than honest (I've now received "the letter" saying they've checked the credit ref agencies - they haven't, at least no record of them doing so) business practice, I shall be sure to let anyone who's interested of my opinion of Barclay's & Barclaycard.



On this point, as you are already a customer of Barclays they can view your file at any time without leaving a footprint (search). They will have a live link to your credit record (at one or more of the CRAs) and also will receive a monthly file of data for every customer which they can use in strategies, such as credit limit decreases.

Banks hold a proportion of all limits they assign in a 'reserve pot'. For example a customer with a £50 balance on a card with a limit of £3000 could cost the bank, say, £500 in reserves. So the bank has £500 it cannot spend just to make a tiny profit on a £50 balance. They would prefer to assign this limit to a customer who will utilise it. Banks only have so much that they can reserve. Reserving gives the bank some protection if write off rates increase. One driver of the recession bail out was that UK banks didn't reserve enough (more customers failed to pay back debt and reserves couldn't cover the loss) and are therefore now reserving higher proportions of balances. Note thanymoreany European banks have tighter reserving policies- note how Santander didn't need bailing out.

Ok sorry for boring you

langtoft_lad

Well I must write a "killer" complaint letter...
Today I received a letter of apology, an explanation and restitution of my credit limit...

Better go and spend some of it :beer:

izools

langtoft_lad wrote: »

I do understand they have the right, I really do!
What I am failing to understand is the reasoning behind them exercising those rights.

I've now managed to access more than one page of search results and perhaps see that there is no logic behind their arbitrary decision making, perhaps it's just the Barclaycard Way?

Until I'm given a plausible reason otherwise - I shall assume its because they want to limit their exposure to the 1% cashback liability.
After all Citicard recently discontinued its 3% Shell and 1% Platinum

The reason some credit card companies are doing this, Barclaycard and MBNA especially, is they are changing the way they disperse the pot they have to lend with.

In years prior, credit limits were just figures on a balance sheet and in a lesser way related to how much the firm actually had available to lend.

Now (there is a technical term for this methodology but it passes me by) they are moving toward the more sensible and realistic approach of going on the assumption that all customers have maxed out their available credit and that amount must be within the pot they have to lend.

As this technically reduces the amount of money the creditor has to splash around their customers, they are portioning it out to those most profitable.

MBNA, Barclaycard, and Egg have been doing this for some time now, slashing the limits, and hiking the APRs of customers that don't pay interest, so that they can portion out what used to be your available credit, to a customer that will make them more interest.

Sucks, but its true.