CC Companies refusing to lower limit

jediknight49

Hi,

This is on behalf of my brother.

He is trying to get his finances in order, and part of that was to reduce the limit's / ask for a reduced interest rate on his 3 credit cards. He has spoken to all 3 companies (Asda / Tesco & Virgin), and all of them have said no to reducing the rate.
Asda & Tesco said something about the bank that owned their
card was no longer with them, and therefore there was nothing that they could do?

One other company, Virgin Money, has said that because 6 months ago he refused a rate hike on his account, his account had basically been 'cancelled' and therefore, a reduction of his credit limit was impossible. The difference between what he owes on the card and the limit is approx £5k. He is unable to use that £5k, so why is it a problem to reduce?

Having not heard of this 'practice' before, i was just wondering if what Virgin is saying is correct?

cifpower

If you reject a rate increase, the rate will be frozen until the balance is cleared and the account will then close. No futher spending can happen on the card anyway

jediknight49

Ok cifpower, thanks for the swift reply. He no longer has the cards anyway, so has no chance of spending on the cards.

I'll inform my brother that what he was informed is correct.

Cheers

UsetheFORCE

YES, this is normal. If you refuse a interest rate hike then they will allow you to pay the amount outstanding at a reasonable rate until you have paid it off.

THEY WILL STOP ANY FURTHER TRANSACTIONS BEING CARRIED OUT ON THE CARD, EFFECTIVELY THE CARD IS CANCELLED AND THE ACCOUNT WILL BE CLOSED ONCE IT IS PAID OFF!

gb12345

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[Deleted User]

There is no reason to lower the limits, if anything this is a bad thing. One of the things lenders look at when assessing you for credit is the level of your available credit that you are using. Having a 10K limit and only using 1k of it is a lot better than having a 1k limit and using £999. Of course this has to be balanced with not having too much available credit! It's not really clear what 'too much' is but I would tentatively say that anything more than maybe 60-70% of your annual income would be 'enough'....Maybe...

anoncol

Having too much credit isn't always a good thing. It depends on the lender.