Having a cc limit reduced

Karb

Hello everyone.

I've received a letter yesterday to advice me that Bank of Scotland have imposed a reduction on my credit card limit. I took out the card at the start of the year, as it was offering a 0% balance transfer. At the time of my application, I requested to transfer £3000, and was given a limit of £4300.

I paid off a few hundred pounds, then last month I transferred a further £1200 to clear another card that I was paying interest on, leaving my new balance at £3400. Almost immediately, my limit has been reduced to £3500, which isn't a problem in the sense that I have no intention of purchasing anything on the card, so I'm not likely to need a limit of more than £3500, but it does make me wonder why they've done it.

Is it a sign that I ought to be worrying about my credit rating? Or should I see it as a good thing that the amount of credit available to me is being reduced?
And is it just a coincidence that it happened as soon as I made a balance transfer, or is there something about making a transfer that has caused the lender concern?

Sorry, I know it's a lot of questions, but any advice would be welcomed

chattychappy

Nobody here will be able to say for sure, but I wouldn't worry about it. Happened to me on a Halifax card a few years ago. Had no problems getting further credit. I believe it was an IT issue as a few people here reported getting limits reinstated. I didn't bother.

I would, however, get a credit reports (don't waste time on the scores) from the CRAs just in case some of the information recorded about you is wrong.

When they do this kind of thing, it is normal to do it when people have paid off a chunk or BT'd away. I assume you didn't miss any payments?

Karb

Thanks chattychappy. No I haven't missed any payments and always paid a little bit more than the minimum repayment.

chattychappy

Could be some compliance bloke who didn't quite understand his course on "responsible lending" but felt he had to do something cos he's got a report to file at the end of the month.

Could be a corporate decision to reduce the amount of credit available via their CCs.

Could be a dodgy algorithm that panicked and decide you looked risky.

Others will chip in with theories...

Fuzzy14

This happened to me yesterday, had the BoS card for a year, pretty useless £500 limit so barely used it and when I did I would clear it in full every month.

Got a letter 2 weeks ago to say they'd increased my limit to a more useful £1000. I used it to book a weekend away at £515 and got a text the next day to say they've cut my limit back down to £500!!!

Apparently a letter is in the post to explain why, obviously not interested in me as they don't make money out of me, but if they don't increase the limit to something useful I'll tell them to stick their card.

plunt

please let us know what the letter says, would be very interested to know!

The_Boss

Karb wrote: »

Is it a sign that I ought to be worrying about my credit rating?

You don't have a credit rating so it's not worth worrying about if you think that exists. They have used your credit file data to see how much credit you have available/are using elsewhere though and reduced it based on that.

opinions4u

Missed payments elsewhere.

Late payment elsewhere.

Increase credit availability elsewhere.

New loan or mortgage taken out.

Things like these can trigger a limit reduction on an existing facility.

Fuzzy14

I spent £515 on my card on Wednesday, I got a text on Thursday to say my limit has been reduced, an email on Friday to say I was now over my limit and charged £12. I have spent Friday, Saturday and today trying to talk to somebody in the bank, best I got was an Indian call center this morning who put me on hold for 15 minutes then hung up on me.

Still no letter to explain why. And no other transactions on the card.

Needless to say I shall pay off the account at the end of the month and close it.

*Scarlett

Fuzzy14 - I would def dispute the £12 charge if they only notified you of the reduction the day after.

If you are getting no help on the phone, put you complaint in writing by post & or email.

garynuman

*Scarlett wrote: »

Fuzzy14 - I would def dispute the £12 charge if they only notified you of the reduction the day after.

If you are getting no help on the phone, put you complaint in writing by post & or email.

Agreed. Companies aren't allowed to strategically reduce credit limits if it puts you further in the red.

If you contact them and explain, you should get the £12 back. Also, make sure the late payment\charge doesn't show on your credit report.

Gaz