Beware - Your Card limit may reduce suddenly

johnbfan

We've just had the same arrive whilst on holiday for my husband. He is in a financial mess and I am sorting it out for him.

He applied to tesco for a card but was refused and been adviced to contact Experian so no 'card tarting' for him as no one will have him.

Lloyds who he has a card with want him to convert to a bank loan but that will mean that although he pays less interest he has to make larger payments each month and he cant afford it so I told him to leave it as it is for a while, and try again later when his credit rating might improve a bit. Its a good thing in a way as it means he can't get more cash on the account

dazed

Without you posting your annual income and total exposure no-one can say why they have reduced your limits but there MUST be a risk element somewhere. I.e potential using of a massive un-used limit or too much available credit to justify the limits thy have given you compaed to your income. They may have old income details etc etc and need to be updated.

bandraoi

When the bank offers you a credit card with a certain credit limit, it has effectively offered to lend you that sum of money at a certain rate of interest with a certain level of payment.

If it wants to change that agreement with you, it has a duty to give you fair warning of its plans. If a bank changes its interest rate it is legally obliged to write in advance and notify you, similiarly if a bank wishes to change the credit limit on an account, it should write to you in advance and notify you.

dazed

bandraoi wrote: »

similiarly if a bank wishes to change the credit limit on an account, it should write to you in advance and notify you.

Its a risk to them so they will do it then write to you

loveandlight

Dylanwing - As upset as I know you are, I wouldn't take their decision to reduce your limit too personal. I mean that in a nice way. If you really want the additional limit, why don't you apply for another card with another credit card company instead, to regain the credit limit you have lost? I don't think their decision to reduce your limit is because you are a bad risk. If anything, it could be because you have been handling your account too well and maybe they feel that in view of the large deposits you have been making that they are not going to make much money out of you in interest.

I read another long thread a few months ago where there were loads of Amex and Morgan Stanley customers who were irate because they had had their limits drastically reduced and the common element with all of them was that they had all paid their account balances off in full every month and/or made regular overpayments. Hence why I and a lot of others believed that their limits were reduced because the card companies are in it to make money and don't want customers making money out of them.

I made two substantial payments to two of my credit cards six months months ago which almost paid them off completely, ( Lloyds Advance and Co-Operative). They never reduced my credit limits but they are making money out of me in interest as I ran up one of the cards again shortly afterwards.

I agree it's shocking that after being with Sainsburys for 15yrs they treat you like this but I would now use it as an opportunity to take your business elsewhere.

TAG

Actually loveandlight I think your right.

In DH case with Morgan Stanley he has had 2 reductions. First was after we did a balance transfer. Which was fair enough in a way. This time we had just paid off the whole balance. Still a pain in the butt though.

Robflh

Hi dazed
Without posting that information, I can a sure you that there has been no change in my income or my expenditure for the last twelve years.

Hi bandraoi
According to the terms and conditions of my Amex card. They will give me 30 days notice of any variation to the agreement.

If they change the interest rate, they will give 7 days notice. However, there is no mention of a notice period for altering the credit limit. Ie. They do not have to give any notice.

Hi TAG
In my case, I have not made any large payments and have been adding to the outstanding balance. Ie. More interest for them.

Dylanwing

Getting a new card is not that easy. My credit profile is fine (Black Horse called it excellent) for loans, but credit card companies don't like it, so I am stuck. It's just a pain as I only want it for emergencies (Really), and whatever my credit profile, they have had 10 years of good custom, so I can't be that bad a risk. I have written to the Chief Exec, as there are a lot of issues (Even my rate is above the advertised as I have an 'old account'), basically suggesting that they up the limit or write off the balance, and asking heaps of awkward questions. I suspect I will get an FO letter, but at least I'm wasting their time and resources (And writing to the Chief Exec usually makes heaps of extra work).

I will let you know what sort of reply I get. It's taken nearly a Month so it should be soon.

Johnbfan was lucky, getting a loan offer - my point remains that if they want to cut risk, do it that way so that they reduce risk in return for offering a better interest rate. Taking interest at 1.4% - 2% pm, then withdrawing the facility at the first opportunity is just taking the p.

Dylanwing

Well, after 4 weeks of waiting, I finally have my letter, telling me in no uncertain terms to FO and tell somebody who cares - Signed personally by Rob Walker, the Chief Exec. The tone really is contemptuous, basically 'we don't care that we mucked you around, we ain't upping your limit, and you can go running to the Ombudsman - See if we care'.

Not unexpected, and reclaim of past charges starts tomorrow!

Regarding the Ombudsman, I presume I don't have much of a case for this, even allowing for no notification and p-poor service?

Pay it off asap and give them no more custom!

Robflh

Hi Dylanwing

It is no consolation but at least you did get a letter. Whether it was actual from the CEO or someone acting on their behalf is a different story and I presume you did not get a reasonable explanation for why your credit limit was reduced.

I think we should all scrimp and save, as well as cutting our budgets to the bone. Then we can pay off are credit cards as soon as we possible can.

Once we have done that we should take a step back in time. Our parents or grandparents put money away for a rainy day and that is exactly what we should do with the money we were paying to the credit card companies each month.

That way they will have been responsible for stuffing themselves.