Credit Limit Slashed without Notice

wardyface

Thank you for your reply. I have not yet received an explanation from them which they said had been posted out to me. Hmmm

It does seem I've suffered due to their cash flow problems. I expect they do it across the board and wait to see who complains. It's still affecting me though as now I have no credit at all. It's either feast or famine

It will cause me to re-examine my loyalties though

thenudeone

droiderm wrote: »

Was there any particular reason you were buying petrol on your credit card ?

Probably the same reason anyone buys anything on a Credit card

In my case:
1) 1% cashback (it's an ex-egg Barclaycard)
2) it's convenient for all spending to leave my bank a few days after my salary goes in, rather than having to keep lots of cash in the current account just in case of an unforeseen emergency
3) build up a good payment history which is necessary when applying for a mobile phone contract, mortgage, or whatever
4) [not really applicable to a petrol purchase though] protection through chargeback and s75, and free extended warranty.

droiderm

I wasn't asking in your case.
Yet another poster who doesn't read the thread.

jpb77

The way banks works is - 'if you do not utilize your limit, then you don't need it.'

Another factor to take into consideration is credit card companies need a pot of cash to offer to new customers i.e. they have an allocated pot of say (example) £500,000 per week, this can vary from week to week. They will look at;

1. how much interest they have earned across their whole customer portfolio and calculate their profit
2. how many exisiting customers have paid their balances in full
3. re evaluate customers existing credit lines and credit risk profile from CRAs
4. Adjust their lending criteria to attract a certain type or types of customer on a weekly basis

In your case I reckon they have reduced your limit by £13k, as you have not utilized the full limit and this has gone into their new customer credit line pot and will be offered to a new customer who will make money off them.

Credit card companies will run a piece of software (automated background process) on a monthly or yearly basis (anniversary of account opening), look at your spending habits, how much money they have made from you (interest, default charges etc) and determine if you need that line of credit on your account. Unfortunately, you were amongst the victim of customers who was shortlisted to have their CLs revoked. Given they have a few millions customers, only about 100 per month are shortlisted (example figure). Please note this software is also used to determine CL increases.

I wouldn't take this personally as banks / credit cards are struggling to find new money, so what they are doing is recycling this by taking these off existing customers and giving them to new ones.

Hope the above will give you an insight and not to take it personally. It can be quite upsetting but you have to look at the bigger picture.

dktreesea

OP, it could be because you were a TSB as opposed to a Lloyds customer, when you got your credit limit. Some Abbey customers had exactly this problem when Santander took over that bank. It sounds like Lloyds are in the process of reviewing all the accounts they have taken over.

I recall once our bank saying that if someone has a £10k limit, but only consistently uses half of it, the implication is that the customer feels they can't afford to use the remainder of the limit.

I'm sure different parts of the bank do work differently and have different criteria. I have had situations where the business section has extended credit while it has been refused on the personal side and vice versa. I have complained where this has happened and the decision to refuse credit has been overturned.

CRISPIANNE3

Never had an issue with Lloyds. The only time they requested my overdraft was reduced was because it was not being used. However they gave me 1 months notice of the reduction. I phoned them and asked if I could keep at the existing level and agreed immediately.

So it is not always the computer that will make the decisions.

thenudeone

droiderm wrote: »

I wasn't asking in your case.
Yet another poster who doesn't read the thread.

I did read the thread, but I couldn't see any reason for your question, so whereas my post related to something on the thread, your's didn't.

What was the relevance of your question? Please tell us.

pheonixrising21

maninthestreet wrote: »

so you paid off £400 of a £1090 debt, with leaves a debt of £690 - so how can a credit limit reduction to £2000 leave you 'into the red'?

I was confused by this too! How much petrol were you buying?