MBNA reducing credit limits

mufc689908

nelly12 wrote: »

Looks quite the opposite to me you numpty. Looks like he's stretched himself right to the limit on every piece of credit he's got.:mad:

He owes about 13k in total if you can be bothered to read it correctly with a couple of CC`s carrying no balance.

Rupert_Bear

MBNA will have a good reason for the reduction and some times posters overlook certain things. Personally speaking I have never had any of my cards reduced. The only thing Lloyds said to me as I was not using my 10k overdraft they were going to reduce to 5k. However I contacted them and advised I would like to keep it and they were happy to adhere to my request.

chattychappy

Rupert_Bear wrote: »

MBNA will have a good reason for the reduction and some times posters overlook certain things. Personally speaking I have never had any of my cards reduced. The only thing Lloyds said to me as I was not using my 10k overdraft they were going to reduce to 5k. However I contacted them and advised I would like to keep it and they were happy to adhere to my request.

My available credit is more than double my income and my debt is probably
about the same as my income. Generally I've had unsolicited credit limit rises and no problems getting credit. Halifax increased my limit in this way and then 2 weeks later said they had done a review and were immediately reducing my limit from roughly £11,000 to £500 and would then close the account. The balance was zero and the account hadn't been used for a few months. Nobody else has done this, so I'm not particularly worried about it.

I think "expect the unexpected" is the way to go, and never take it personally. (Not that anyone on this thread appears to have done.)

udydudy

same with me!! Had a card with £17k limit was reduced to £1k!!. The card was over 5 years old and they had themselves increased the limit from £7k to the £17k over 5 years. Called cancelled the card. They tried a lot to make me keep it, but refused as £1k of limit is not really worth it unless they give a 0% BT with no fees like santander zero card.

bye bye MBNA. looks like MBNA is going the same way Barclays did a few years back randomly reducing limits(after having increased it themselves) on the basis of "responsible lending". I would think they must be having an increase in late payments & defaults and have started to panic. Their loss, did not bother me one bit!!

Jospeh

Hello all,

It is interesting to read these posts as it is generally felt that banks and other financial services organisations are quite cryptic in respect to lending rules, however I would like to say that it in fact very simple - banks want to make money...

When a bank agrees to extend a credit limit to you, there is a capital cost whereby the bank needs to place some 'risk weighted capital' aside to cover the potential risk that the customer will default. In the case of a customer that has a high limit (and I would certainly say that a £18.5k limit for a customer with a £40k gross income is very high - should be no more than 3x monthly net salary in my opinion) that is not used, it actually costs the bank money while it also needs to handle the high risk associated with the high limit to income ratio.

The best case scenario for a lender / bank, would be for you to utilise the limit and then repay it within a reasonable timeframe - generally within 30 days. The bank will receive an income when you use your card as merchant fees that the shop is required to pay upon accepting payment by card. If the card is paid off each month, the bank can continue to receive this payment as you continue to use your card.

It is funny, however, lots of people think that having a high limit and low level of utilisation is a good thing - it isn't for a bank as they do not know what is coming round the corner... It may help to try and think of your position from the perspective of a bank...

Ultimately, if you are not using your limit (that is costing the bank money), why should the bank continue to give it to you?

I hope that this sheds some light into the cryptic world of finance.

All the best,

Joseph.

drowningdepressedindebt

I have 60k on cards and they all write and reduce periodically, its a relief.... they are coming down, but its slow.... its the interest that crucifies...

chattychappy

Jospeh wrote: »

The best case scenario for a lender / bank, would be for you to utilise the limit and then repay it within a reasonable timeframe - generally within 30 days. The bank will receive an income when you use your card as merchant fees that the shop is required to pay upon accepting payment by card. If the card is paid off each month, the bank can continue to receive this payment as you continue to use your card.

Disagree. They will only make a few % at most on the balance - the merchant fees are shared with the network. The best case scenario is where you don't clear the balance, but allow it to run up to the credit limit on an APR of, say, 25% to 35%. The interest of 2 - 2.5% per month is more than they would make on merchant fees and it's all theirs.

(Of course even better if you pay all but a £1 of the balance each month. Then they get interest on the full balance and merchant fees as you spend up to the limit again. But that's a bit artificial.)

Fruit_and_Nut_Case

Jospeh wrote: »

Hello all...

Hello Jospeh. :hello:

Thank you for joining the Forums to respond to a two-year-old thread. Different providers appear to have different criteria. I don't think that one size fits all.

Rupert_Bear

drowningdepressedindebt wrote: »

I have 60k on cards and they all write and reduce periodically, its a relief.... they are coming down, but its slow.... its the interest that crucifies...

Interesting. I have about £60k of available credit on my cards. I used
to do a lot off stoozing but not so much now.

I remember in 1974 when I had an Access card with a limit of £150 and wanted an increase to £200. The guy at Natwest Access said he did not think I was credit worthy because I had exceeded the limit a few times. How things have changed!

BugsyBrowne

Rupert_Bear wrote: »

Interesting. I have about £60k of available credit on my cards. I used
to do a lot off stoozing but not so much now.

I remember in 1974 when I had an Access card with a limit of £150 and wanted an increase to £200. The guy at Natwest Access said he did not think I was credit worthy because I had exceeded the limit a few times. How things have changed!

Difference their rupert Drowingdepressedindebt doesn't have 60k available her/him owes 60k on cards.