Beware - Your Card limit may reduce suddenly

Dylanwing

Some good points being made. Against the Banks, does not 0% balance transfer offers encourage multiple card holding? By reducing my limit twice to match balance, is that not a withdrawal of facility, and if the Banks are so caring, why not offer a loan so that the debt can be repaid? A credit card where the limit is reduced in this manner is as much use as a chocolate teapot. The staff will not negotiate if the reduction causes hardship, or financial loss where a commitment has been made in the belief that limit was available. The staff patronise you by phone and tell lies (Well, at least in my case!). And whilst there are some valid arguments regarding responsible lending, I have not had written notification of limit reduction, twice I have been promised that a senior person would phone me back, and my letter specifically requested a call to confirm receipt. Well, as Diana Ross sang, I'm Still Waiting. Can any of you Bankers justify discourtesy and poor customer service???

jamalfatty

Nevermind just bankers, nobody can justify crappy customer service like that. But as I've said, they wont notify you before a credit limit decrease for obvious reasons.

Dylanwing - I feel your pain re: the reds! Last time I listen to someone's advice on a message board and get myself out more

xycom1

Halifax did this to a standard Mastercard I had with them (about 6 year old account) reducing the limit from £6800 to about £5500. No loss though as I cancelled it soon after and most of my other Halifax accounts along with. :T

Call_Centre_Monkey

The reasoning for the decrease is your financial situation has changed since you were given that credit limit. In the past year Sainsburys have been tightening their belts a lot, mainly due to the level of bad debts occuring.

For instance, say you apply for a Sainsburys card, and they reckon you're good for a £5k limit, which you use up once the account is open. Say a year later, you apply for another credit card, and are given another £5k limit. Therefore your financial situation has changed, you now have £10k available to you. However Sainsburys still only think you are good for £5k; obviously some banks have different lending policies, which revolve around the amount of risk they are willing to concede.

Sainsburys then take the decision they can't risk that additional £5k credit you have now, and take the decision that they will decrease your limit at the earliest opportunity, ie when you pay the balance off - either in one go or in chunks.

As already mentioned, they can't provide notice of the decrease before it occurs as it leads to big risk implications, i.e. people quickly using up the funds before the decrease occurs. Sainsburys will also not decrease the limit to below your balance - it should be decreased to somewhere in the range of your balance +5%.

Ultimately, you have previously agreed your credit card company can decrease the limit at any time - if you aren't happy with this, you shouldn't have agreed to the terms in the first place. The best way to avoid these types of decreases is to close any accounts you aren't using - i.e. cards with big limits sitting on zero balances. Those funds are still available to you, so some banks will take those into account when making credit/risk decisions on your accounts.

Dylanwing

CCM - I opened the account 15 years ago, and Sainsburys have NO up to date record of my employment, income, equity in property etc. Yes I have other loans (Mostly secured) , NO other cards, and all repayments are up to date. They may know my level of debt, but that is irrelevant if they do not know my income. And to clarify, limit was £5,850, reduced to £3,450 - Available credit £19. This Month reduced from £3,450 to £450 - Available credit £23.

Call_Centre_Monkey

Can't you see that they are doing it for your own good? Surely it's best they responsible lenders, rather than giving customers too much credit which they end up using and then can't afford to pay back.

You have previously agreed that you will allow the company to decrease the limit at any time of their choosing for whatever reason. I know it's a kick in the teeth after years of loyalty, but as responsible lenders sometimes tough decisions need to be taken.

Dylanwing

Lucky old me! As pointed out, I could have been relying on that limit for a hotel or committed purchase! That would have been such a great help to me. So, because others default, they can just mess me around having had a well conducted (And profitable) for 15 years. In any case, if they made bad lending decisions, why take it out on me? Why not sack the idiots who lent the money?

The upshot of this is that they have a letter asking many awkward questions, and if they don't back down, will get another pointing out all of the inconsistencies in their stories, a request for all info. held under the Data Protection Act, hassle from my wife as she tries to trace a small dormant savings account and, most likely, I will then go to the Ombudsman. Not because I am desperate for the credit (In fact the account will probably be closed within 6 Months), but because they have not been fair, honest or polite in the way they have handled this, and the more of their time I can waste the better!

Last time, I was called on my mobile and managed to keep the conversation going for 45 minutes - Then demanded it all in writing! A small dent in their profits, but as the Book of St Tesco says "Every Little Helps".

thumshie

Dylanwing wrote: »

CCM - I opened the account 15 years ago, and Sainsburys have NO up to date record of my employment, income, equity in property etc. Yes I have other loans (Mostly secured) , NO other cards, and all repayments are up to date. They may know my level of debt, but that is irrelevant if they do not know my income.

To quote the T&C's

sainsbury's wrote:

12. Changes

12.1 You must write to us immediately if you or any additional cardholder changes your name or address. You should also advise us of any material changes to your personal circumstances that might have an impact on the credit limit assigned to you or to additional offers that we may make.

12.2 We can change your credit limit or cash limit under conditions 2.1 and 5.1, however we will only reduce your credit limit or cash limit if we have a good reason, for example, your circumstances change or because our assessment of the risks of lending to you changes. For any other changes, we can change this agreement, including the interest rates and charges, for any good reason. We will give you at least 30 days' notice in writing of any change to your disadvantage, other than a change to your interest rates, cash limit or credit limit. We will give you at least 7 days' notice of any change to your interest rates or any other change to these conditions that is not to your disadvantage.

This shows two points:
1. You are meant to tell them of anything effecting your circumstances(better or worse).. It's not for them to ask what your new salary is...
2. That they won't give you prior notice of changing credit limits, even if your account has a note saying 'limit to be reduced'

Now, I agree no bank should be rude, but they have responsabilities. 1. The customer, 2. The shareholder. They have obviously marked you -rightly or wrongly- as a risk, after all this will also be why vanquis turned you down for your application for a credit card(other posts)..

P.S. I thought sainsburysBank opened is 1997- only 10 years??

Call_Centre_Monkey

Ah good point - it did indeed open in 1997.

Dylanwing, I'm sorry you feel hard done by, but you already agreed to the t & c's - you can't really go back on them now... If you do want to pursue it though, I would recommend going through the Sainsburys complaint procedures first (ie a formal complaint to them). It's extremtly unlikely the Ombudsman will look at your complaint without doing this first. As far as I remember, out of thousands and thousands of decreases of this nature, only 1 or 2 have been overturned after a complaint, due to a mistake being made by the bank. So I'm afraid you're probably wasting your time pursuing it...

Dylanwing

Thanks - Good to hear the 'Official' line, and I stand corrected if I have been a good customer for a mere 10 years. Opinion seems very divided re my credit rating, excellent at Lloyds, but a Vanquis reject. BTW - Not quite sure that responsibility to customer is high on the lost of any Banks priorities! Or maybe I am just an old cynic.