Tesco credit card huge limit decrease

neilied

Hi all. In preparation for some credit repair ready for mortgage I paid off 2 Tesco credit cards which had high apr. I left them active so as it will help credit card utilisation which was dragging my rating down. This week I received email statements which shows some residual interest of about £20 across both cards. However to my dismay I note that both cards have had their limit reduced to £350 each wiping £4700 of my limits and there for negating the effect on my utilisation. I had no warning of this at all and they cannot reverse this. I have cut my cards and has no intention of using these funds but hoped that this would kick start my way to a better rating. Absolutely fuming.

Ta

Neil

[Deleted User]

Apply for a card elsewhere and see what you get given. No need to fume, just keep moving forwards.

Paying off your debts has done far more for any rating you may have in mind than the negative of lower limits.

neilied

Should they inform customers before this happens? Also I don’t wish to apply for any credit at the moment as I recently took car finance and am looking at mortgage options. A broker told me to reduce balances where possible but not to take any new credit as this will have an adverse effect. Personally Tesco bank are shocking and apr high so good riddance and I’ve already cut up my cards and removed from Apple Pay but just think it’s underhand that they can do this

eskbanker

neilied wrote: »

I had no warning of this at all

neilied wrote: »

Should they inform customers before this happens?

Can you spot what some people would do if they were told in advance that their credit limit was going to be reduced in x days/weeks/months time?

neilied

Yep but what would they do if I didn’t reduce my balance. Reap the rewards of 25% apr £80 a month interest as they have done for the last 3 years without so much as a how can we help you.

eskbanker

neilied wrote: »

Yep but what would they do if I didn’t reduce my balance. Reap the rewards of 25% apr £80 a month interest as they have done for the last 3 years without so much as a how can we help you.

Not sure your expectations of Tesco (or any other lender) are realistic to be honest - those who maintain interest-bearing balances, without any signs of difficulty in meeting repayments, are their ideal customers so there's not much incentive for them to help you!

If you were running into financial problems and failed to make minimum repayments then they'd potentially consider negotiating (and your credit history would be correspondingly damaged of course), but if you hadn't chosen to reduce your balance then chances are they would indeed have left the status quo.

Perhaps your reference to reaping the rewards suggests that you see it as profiteering but you presumably agreed to borrow money from them at that rate?

stehouk

Seems odd that they would reduce a card's limit if they have been making money from it, i understand when they reduce limits on unused cards or low usage that have large limits, did you pay them of with savings or a balance transfer/loan something seems to have spooked them.

neilied

Savings to clear. No missed payments in 4 years, and only 1 late a few years ago. 1 CS says I should have been informed and given a chance to challenge, another says they don’t have to mention decreases only increases

phillw

stehouk wrote: »

Seems odd that they would reduce a card's limit if they have been making money from it

Maybe they thought this guy is trying to game the system by paying off his balance and having a low utilization and if he goes for a mortgage secured on a property then any unsecured debt we lend him in the future is going to be lower down the list.

People who have been paying interest on their credit card don't usually pay a large chunk of it off, it likely spooked them.

stehouk

I wouldn't stress over it, if you have no other debt when you apply for a mortgage it looks good, i swap and change cards all the time once the 0% offer has finished i close the card so i have options in the future.

born_again

stehouk wrote: »

Seems odd that they would reduce a card's limit if they have been making money from it, i understand when they reduce limits on unused cards or low usage that have large limits, did you pay them of with savings or a balance transfer/loan something seems to have spooked them.

It's called persistent debt and something all card providers now have to take into account.

Makes good reading
https://www.stepchange.org/debt-info/persistent-credit-card-debt.aspx