Credit Limit Reduction... Closed my account

adeyb

Hi this is my first post.

I've been with my credit card company for over 10 years. Always made my monthly minimum payment, never missed one to this day.

My credit limit was £15,000. A silly limit, I appreciate, but still £15,000. At least until I tried to make a purchase today when my card was declined.

I checked online to find that the limit had been reduced to £3,000. This is just £220 higher than the £2,780 I owe.

I rang MBNA to find out why this had happened. I was told they were being 'responsible lenders'. I explained to them that my credit rating is perfect, I have never defaulted on payment, I am working (I'm an Accountant), in fact, I could not see any reason for this reduction.

No change. I asked to speak to the manager. I was told that one would contact me within 24 hours (probably Monday). True to their word (only thing I can say about them) a manager rang.

She agreed that I was a good customer. But still no go on the credit limit.

They have basically closed my account and removed my credit facitily. This seems totally unfair and after speaking to my boss, he said he had heard it happen to others.

Is there anything I can do about this?

Voyager2002

Have they closed your account, or reduced your credit limit? The two actions are very different.

All that you can do about it is open another account with someone else, but surely an accountant would be concerned about the cost of interest and seek to repay the amount outstanding rather than seeking to borrow more.

interminal5

I had an interesting experience with my Halifax Credit Card. I've held the card for over 20 years, had a credit limit of £7000 and have conducted my account impeccably during that time; paid off in full each month etc.

They wrote to me recently and said that they had reviewed my account and were reducing my credit limit to £500 and closing the account shortly thereafter. Presumably, and paradoxically I must be a 'bad customer' as I am not in any debt, financially secure etc and always pay on time. From this I might conclude that a 'Good Customer' is one who racks up debt by the bucket load, maxes out their credit card each month and only makes a minimum payment when necessary. Truly astounding! And this is from a bank that I and you, as taxpayers have bailed out due to their financial irresponsibility!

olivia84

hi there,

i'm not sure there would be anything you could do about it, it's their decision what credit limit they give to their customers but i agree, it is ridiculous. to give you that level of credit limit, giving you the option of spending it then taking it away just when you are, and probably causing embarassment is not good customer service.

mbna did this with me - i had never missed a payment and had a £4000 limit (if i can remember) my balance was at £2600 and i tried to withdraw cash from an atm and it wouldn't let me. when i phoned up they said it was because they saw me as a risk for wanting the cash advance (meaning i was obviously desperate for money and might not pay them theirs back!) but why the heck give the option of the cash advance!? they reduced my limit to exactly what i owed them.

if i were you, and you say you have good credit, i would find another credit card with no association to mbna and do a balance transfer at 0% and close your account with them. letting them know in no uncertain terms that they have lost a good customer.

Pheebs67

Firstly . . . there's nothing you can do about it. Don't get wound up by it, just ditch and switch.

But . . . this is just down to the industry regulations . . . some lenders take it more literrally than others, but unless you're making use of the 'full' CL, they're encouraged by the regs to reduce the limit to more along the lines of your regular use . . . I'm guessing that you've maybe not gone much about £3,000 in the last year or so . . . ?

Paul_Herring

adeyb wrote: »

My credit limit was £15,000. A silly limit, I appreciate, but still £15,000. At least until I tried to make a purchase today when my card was declined.

I checked online to find that the limit had been reduced to £3,000. This is just £220 higher than the £2,780 I owe.

So, you had a £15K limit, but were only using just under £3K of it? On a regular basis I assume?

If so, granted cutting the limit to only £3K is probably overkill, but if you're not using the whole limit, is there any sensible reason why they shouldn't cut the limit from £15 to (say) £5?

I rang MBNA to find out why this had happened. I was told they were being 'responsible lenders'.

In a sense they are. They see you're not using the limit, so they reduced it accordingly (granted a bit close to the current balance, but see above - £5K may have been less drastic.)

That then allows them to give the limit to someone who will use it.

I explained to them that my credit rating is perfect, I have never defaulted on payment, I am working (I'm an Accountant), in fact, I could not see any reason for this reduction.

Apart from not using it you mean?

You could 'score 1001 with experian' and they'd still probably cut the limit.

I've been with my credit card company for over 10 years.
[...]
Is there anything I can do about this?

Learn that loyalty counts for nothing in the financial world, apply for a card(s) elsewhere and ditch MBNA.

ElmerFudd

I recently had a problem with a credit card company myself. They claimed I hadn't used my credit card at all for purchases in the last 6 months which was why they reduced the credit limit. That was a lie though, as I had. In addition to this I'd just made purchases with the card a few days before they reduced my credit limit. Fortunately I was able to cancel a number of them and use a different card so that it wouldn't throw me over the "new" reduced credit limit. The least they could do before they do this sort of thing is inform people. Responsible lending ....huh

Paul_Herring

ElmerFudd wrote: »

The least they could do before they do this sort of thing is inform people.

And risk the customer going out on a spending spree to use up the available credit (to prove a point, or otherwise?) I don't think so...

But then again we're getting back to my point that I think they cut the limit too close to the current limit in this case (if it was the unused available credit that prompted the cut to begin with.)

It's not beyond the bounds of possibility that MBNA think they've 'seen something' that's prompted them to do this.

What that 'something' is, I wouldn't like to speculate, since we have only one side of the story here, and insufficient detail at that.

adeyb

Thanks for the replies.

The credit card debt was built up over a number of years. Not everyone has access to cheap student loans...

No, they haven't physically closed the account but with a £220 amount to play with I don't have much credit. So in essence the account is of no use to me.

I agree that it's their right to reduce, and I too agree with the notion of 'responsible lending'. But what about my background and history? What about acting on a balance of information? Surely common sense should come into play?

How is it 'responsible' to cut off my sole mean of credit?

They have picked a figure and that's it. End of story.

My worry is if I apply for another card my credit score will be effected. Saying that, they seem to play by their own rules, so what have I to lose I suppose?

SnowTiger

adeyb wrote: »

Hi this is my first post.

I've been with my credit card company for over 10 years. Always made my monthly minimum payment, never missed one to this day.

My credit limit was £15,000. A silly limit, I appreciate, but still £15,000. At least until I tried to make a purchase today when my card was declined.

I checked online to find that the limit had been reduced to £3,000. This is just £220 higher than the £2,780 I owe.

Look at it this way: you owe the credit card company almost £3,000 and you're paying back the minimum amount each month.

No one in their right mind would carry a balance on a credit card, unless it was at 0% interest, therefore if you could afford to pay more than the minimum amount you would.

So, is it appears a £3,000 limit is just about the most you can financially handle.

YorkshireBoy

adeyb wrote: »

...my sole mean of credit?

My worry is if I apply for another card my credit score will be effected.

It will be...very soon...because once they update your credit file with the new information you'll be using almost 100% of the credit you have available to you, ie you're maxed out and any new lender you approach will score you as desperate.

If they've only just cut it, ie this month, then best to get an application in for a BT card quicksticks! (which begs the question why are you carrying such a large revolving balance...unless its a 0% promotional offer?)