TSB lowers credit limit with one day's notice

chattychappy

It's pretty simple.

Lenders express a willingness to lend money via the credit limit. They are free to reduce this if they want to. Why should they be "forced" to lend you money if you demand it? Why does "being vulnerable" make any difference? You agree to a variable credit limit when you take out the product.

Existing borrowings are a different matter. They can't just call in what they've advanced you. I accept that in reducing a limit, transactions might "cross in the post" - but they deal with these fairly - you shouldn't be getting overlimit charges/reports because of this.

Obviously if they gave more notice people would take advantage.

As for the regulator "not doing it's job", I think things are fair for both sides. It couldn't operate any other way.

HornetSaver

chattychappy wrote: »

It's pretty simple.

Lenders express a willingness to lend money via the credit limit. They are free to reduce this if they want to.

[...]

I accept that in reducing a limit, transactions might "cross in the post" - but they deal with these fairly - you shouldn't be getting overlimit charges/reports because of this.

Obviously if they gave more notice people would take advantage.

(snipped bits not of relevance or not in dispute).

For me, they shouldn't have to give a moment's notice to say "we're not lending any more". However there should be a grace period between when that decision will have been taken, and when communication on that decision will have been received and acted upon. The protections on both sides should be stronger than relying on the other party to behave reasonably, given that all things not specifically defined as unlawful can be considered reasonable until proven otherwise in court.

Let's say my 0% CC limit were £2000, and my balance has steadily climbed in recent months to its current total of £1,195. Perfectly reasonable for the CC company to decide "your new limit is £1,200", but equally reasonable for me not to be psychic and spend £100 on the card later that same day before the lender has had an opportunity to ensure I'm aware and/or implement a technical solution to prevent me from going over the new limit.

The protections for both a lender and a borrower in such a scenario should be stronger - the borrower should have five weeks (the amount of time it takes to be certain that they've received at least one set of pay, allowing for bank holidays, different pay cycles etc) to ensure that they are below the new limit so as to avoid being treated as someone in arrears or having gone over their limit for fee and credit reporting purposes. The lender should have the right to prevent transactions from taking place after the decision is made but before it can be 100% certain that the borrower is aware of the new situation, however during this very brief window the borrower should not incur the usual fees and charges which would be applicable in any other situation of going over the limit.

phil2580

All this arguing about notice periods is pointless...the Credit Card companies aren't doing anything wrong. It's their money that is at risk (kind of, but that's how modern banking works), if they choose to reduce how much they're willing to risk, that's their choice.

The OP seems to believe that a CC company can reduce your limit below the current balance...they Consumer Credit Act prevents this. They will also, under normal circumstances, decrease to around 10% over and above the outstanding (plus pending) balance, so the OPs scenario becomes almost impossible, and on the extremely rare occasion it happens, a quick call to the CC company will sort it out.

Nebulous2

SuzieSue wrote: »

That's all fine. I have no problem with any lender reducing my credit limit. My problem is them giving me only one day's notice which could cause unnecessary financial difficulties if I could not find the money immediately to pay off the excess balance.

That's all hypothetical though, because there wasn't an excess balance. There certainly wasn't for me, and as I understand it there wasn't for you either.

So you are into the realm of supposition here. If there was an excess balance then I'd contact them to see what they would work out. You might find they were perfectly reasonable to deal with.

I'm still not getting why you are so wound up about something that didn't happen, from a company which has freely given you a product that works to your advantage.

Financial providers want to manage risk. Decisions I take in my life increase the risk to them. I took around £30k to stooze in a very short time. I assumed that would have consequences. I wasn't hugely surprised when they reduced my limit. It isn't personal.

SuzieSue

John-K wrote: »

You are paranoid. They do it in the hope that you stay with them after the promotional rate ends.

You genuinely seem to not understand the terms that you signed, or you just want an argument. In either case, ai!!!8217;m out. Your complaint is ridiculous, you come across as entitled and whiney.

That is exactly what I said. How is that paranoid? They are giving me free money in the hope that I will make a mistake and have to stay with them and pay their high rates.

I'm glad you are out as you come across as totally ignorant especially after your comment about Millenials.

System

SuzieSue - you argument would have weight if they were demanding immediate repayment of existing spending.

They are simply declining to offer further borrowing - they can actually refuse to authorise any (new) transaction without lowering the credit limit.

Overdrafts are worse - they are repayable on demand.

SuzieSue

Heng_Leng wrote: »

SuzieSue - you argument would have weight if they were demanding immediate repayment of existing spending.

They are simply declining to offer further borrowing - they can actually refuse to authorise any (new) transaction without lowering the credit limit.

Overdrafts are worse - they are repayable on demand.

But they did demand immediate repayment.

The letter said:

If the current spend on your cc is more than your new reduced limit you'll need to pay back the difference before 8 March 2018. And if your balance were to stay over the new limit after 8 March 2018 you will be charged and over limit fee of £12. Any promotional interest rates that applied to your balance will also be lost.

The person in post #5 was over their new limit and had to repay immediately.

PixelPound

SuzieSue wrote: »

But they did demand immediate repayment.

The letter said:

If the current spend on your cc is more than your new reduced limit you'll need to pay back the difference before 8 March 2018. And if your balance were to stay over the new limit after 8 March 2018 you will be charged and over limit fee of £12. Any promotional interest rates that applied to your balance will also be lost.

The person in post #5 was over their new limit and had to repay immediately.

I had missed this before. You would have thought there would be a grace period to repay if over the new limit. However it is in their T&C that they can. Was the new limit more than 10% above existing balance, as some have stated it supposed to be. Reliance on CC for debt isn't great as they can reduce the limit, which is often why loans are promoted in those instances.

SuzieSue

nic_c wrote: »

I had missed this before. You would have thought there would be a grace period to repay if over the new limit. However it is in their T&C that they can. Was the new limit more than 10% above existing balance, as some have stated it supposed to be. Reliance on CC for debt isn't great as they can reduce the limit, which is often why loans are promoted in those instances.

Yes, that is what surprised me. How can it be reasonable to lower someone's limit with 1 day's notice and expect them to pay any excess back immediately?

The new limit was about 4% over my current balance. I'm not going to dispute that as it doesn't have a negative effect on me.

PeacefulWaters

SuzieSue wrote: »

Yes, that is what surprised me. How can it be reasonable to lower someone's limit with 1 day's notice and expect them to pay any excess back immediately?

The new limit was about 4% over my current balance. I'm not going to dispute that as it doesn't have a negative effect on me.

They've sent a one size fits all letter to account for very recent transactions.

You're remaining offended by something that hasn't impacted you to any degree and a process that is rightly designed to reign in new spending, most likely where new lines of credit have been recently opened up that TSB have become aware of from credit reporting.