can credit card change credit limit for no reason?

onedayiwillbestraight

New to these boards, hope someone can advise me. I am a freelance worker and 2 years ago had a bad year which meant I had to go into my tax account to survive. When tax payment time came I had no option but to put the payments on my Egg card with the idea I would pay it off gradually. However I only managed to pay a small amount off and the interest is huge. This year I have been ok income wise and paid my tax upfront in cash. I am looking ahead now to Julys and Jans payments. My question is this-I have been putting my tax away in my savings account (low interest) and paying the miminum payments off my card. I am thinking instead it would be better to pay my tax amounts off my card plus the amount I would pay off minimum payments with the idea that I will bring the card down, reduce interest payments and then in July and Jan put the tax back on the card. My fear is - would there be any chance Egg would suddenly reduce my credit limit meaning I would have no means of paying my tax when that time comes around?? I have always paid on time with them and I have checked my credit record online and it all seems fine. Would welcome any advice. Thanks

Fruit_and_Nut_Case

Yes, they could reduce your limit without warning. There have been reports of providers doing this but I'm not sure if Egg are amongst them.

On a different note, I presume that you are aware that you will lose your Egg card in the next few months and be issued with a Barclaycard, if you meet Barclaycard's criteria.

So the situation may be more fluid than you think.

See https://forums.moneysavingexpert.com/discussion/3084232

sammyjammy

They can change it anytime they like. Halifax changed mine from £9700 to £1900 without even telling me, I tried to use it in four places before the penny dropped, got a letter about two weeks later.

Surely unless the Egg card is 0% for purchases you would be mad to put your tax owed on a credit card when you've got the money saved?

stazi

You need to read the earlier posts about Barclays buying up Egg card customers by May/June 11. Personally, I would payoff as much debt off the Egg card ASAP.

CH27

Egg have been taken over by Barclays so who knows what will happen.

CLAPTON

if you had difficulties two years ago but things are OK now, you really ought to consider why you can't pay the CC off and also pay your tax on time.
if you have variable income you really need a substantial saving buffer and no debt whatsoever.
juggling the tax and a CC is not the solution : either accept the job isn't paying enough and consider your other employment option or consider how you spend the money and see if you can reduce.
what will happen if there is another year with low earnings?

onedayiwillbestraight

thanks for that. sorry dont think was clear, the idea wasnt to use my credit card to pay the tax and increase the amount on the card. i was thinking of rather than my tax account sitting with money in not earning much i would use it to pay off my card for now and then if neccessary use it again when tax payments due if that makes sense. so worse case scenario be no worse off than before and have saved a bit on interest in the meantime. my aim is absolutely to pay it all off, again i was looking at worse case scenario by talking about minimum payments. Anyway you have answered my question, if there is a chance that the conditions will change I will keep my tax savings in a separate account and pay off my credit card separately.

Scaredy_Cat_3

Don't mean to worry you, obviously we can't second-guess the card company, but quite often they do reduce credit limits the minute you pay off a high balance. I've known people clear a big balance with plans to use the newly available credit it will create - only to find the credit card company reduce the credit limit as soon as they clear the balance. I'm not saying this will happen to you, but just be aware it is a possibility.

Doshwaster

In the financial good times (pre-2007), banks were increasing credit limits all of the time. Now they are cutting them bank to reduce their risk.

I have a HSBC credit card which I hardly ever use and never have a balance of more than few hundred pounds. A few years ago i had a silly balance of something like £12,000 but it has been cut back a couple of times to about £4,000. I wouldn't be surprised to see them cut it again.

onedayiwillbestraight

no you havent worried me, its useful advice. i will make sure i pay off the card but with money i can afford to not use again so am ok if they reduce the credit limit. will treat it more as a loan with no top up facility to pay off with regular payments rather than a credit card and grin and bear the interest levels in the meantime. thanks for your input everyone

PeeWee

They just done it to me!

Had a balance of about £950 £1000 limit for last 6 months, never missed a payment in 4 years, paid off the balance in full, and set up the direct debit to take the full amount each month , as I planned on using it for business expenses and clearing it each month,

Just traied to use the card to book some flights and hotels, and it was declined.

Rang Egg to find they have dropped my limit to £500 3 days after the balance was paid off!!

Not happy