John Lewis - 'Helping' by reducing credit limit

Ergates

Given that it appears that multiple customers are having thier limits reduced, it seems probable that they're not targetting people who are struggling with their finances, they're just reducing unused credit limits across the board. This is possibly to reduce their current risk exposure. Maybe some analysts have said that their exposure is too high. Maybe their risk appetite has reduced. Maybe they're preparing for a new push to get more card customers (i.e. get more people with lower individual limits).

If they have [lets just make up the numbers] 100,000 card customers, and they all have a limit of £9000. And if, for some reason, all the customers suddenly maxed out their cards, they'd find them selves being owed £900 million. To lend this money, they'd probably have to borrow it first - at a lower interest rate than they'll get back (at least, that's the plan). If all these customers then defaulted, they'd find themselves in a bit of a pickle - having to find the money to pay *their* creditors. This is a risk exposure. How much risk a lender is willing to expose themselves to is carefully calculated based on their predictions of customer default rates (i.e. how many of their custoemrs *won't* pay them back), and is balanced by the profits they'll make from the lending (more lending = bigger profits).

If a large proportion of their customers aren't using their credit limits, then whilst the risk is still there, they're not seeing the benefits from it. Could be they're looking to move things around a bit to change that.

John Lewis aren't in a particularly good financial position at the moment, earlier this year they reported a 6 month loss of nearly £30 million. Seeing them shake things up a bit isn't surprising under those circumstances.

blue.peter

Ergates wrote: »

John Lewis aren't in a particularly good financial position at the moment, earlier this year they reported a 6 month loss of nearly £30 million. Seeing them shake things up a bit isn't surprising under those circumstances.

But is it actually John Lewis's money that's backing these credit cards? I thought that they were operated by HSBC, that HSBC were backing them, and just using the John Lewis name (and, presumably, paying JL a bit for the privilege).

abz88

blue.peter wrote: »

I can't speak for eskbanker, but if my letter (when I get it) says the same, I'll be making a formal complaint of it. It's deeply offensive to suggest that I need any help with managing any of my finances: I do a very good job of it on my own.

And there's nothing in my credit report that could have, as you put it, spooked them. I've had a perfect score for as long as I've been checking them, and there's nothing untoward showing.

I can understand being annoyed at them reducing your limit (even if you don't actually use the full amount), but deeply offensive?

Even if that were true, what does that have to do if your affordability? Who do you think a CC company wants to lend to, someone on a low salary with "perfect credit score" (so unlikely to ever pay any interest on the card) or someone with a large salary and a below perfect score (and likely to pay interest on a card)?

Happibunni

Received my letter last week. Didn't appreciate the rather patronising tone but, as they don't make money from me in interest, I can understand they're a little peeved:rotfl:

This doesn't impact on my spending so didn't cause any upset. I thought I saw a tab on the online banking for an increase in credit limit - could be wrong though

sharp910sh

Just got the same letter! Hmm Very odd but I don't really use my credit card at all! Got it ages shot to buy a TV and that's it.

jimbo26

This appears to be something happening across the board, we have seen similar threads involving other credit card companies in the last few moths. Seems as though the industry as a whole are looking at limits.