Credit Card company reduced my limit...

KevinM2

I just wondered if the following is anything to worry about...

I recently decided that my savings (getting not a lot of interest) are better off used to pay off my credit card debt (don't know why I didn't think of this sooner!)...so I had about £40,000 in savings, and cleared 7 credit cards, down to a zero balance, and will close them once the residual interest is sorted after this months statements...

Anyway, within a week of the cards being cleared, 3 of the credit cards (all owned by NewDay) had their limits dropped from circa £7000 to £300

It doesn't bother me per se, as I will be closing them anyway, but I phoned them to discuss this with them and see why they were all dropped...and they said that they had some information back from the credit reference agency which prompted the drop in limit. Does that sound right? Do the CC companies get regular updates of some kind from credit reference agencies? The guy told me that they do searches on credit cards every 4 to 6 months, so I asked him how he was allowed to do credit searches on me without my knowledge or approval, and that no searches are showing up on my credit reference file...all seems a bit suss.

My personal feeling is that for some reason, having £40,000 worth of sudden available credit across my credit cards might have flagged something, as I wonder if having too much available credit can be almost as bad as being near your credit limit, but I don't know...I am just supposing...I did check my credit file, and nothing shows on it that is odd, no black marks or anything, and it just seems strange that these drops happened less than a week after I cleared all of the cards.

Anyway, it is only the NewDay cards that this has happened to, the rest of my cards are all showing a zero balance, with the limit still up at £7000ish, with available credit at the same as the limit...so should I be concerned?

Thanks...

[Deleted User]

Yes, your card providers will make occasional CRA checks.  You gave your approval when you took out the cards, so everything's ok on that front and there's no 'suss'.

Nothing to worry about, all in all.

KevinM2

Was it the clearing of my 3 cards with NewDay that might have prompted a CRA check by them, do you think? it just seems very coincidental that they do a CRA check a few days after I clear all of my debt with them...

[Deleted User]

It's more to do with the times we're now in and the current state of lending.

Coincidences always seem coincidental.

KevinM2

That's exactly what I was thinking...they simply didn't want my business anymore, as they wouldn't be raking in interest from me, so I outlived my usefulness to them, and whilst they couldn't simply cancel my card (without good reason), they could make it so that the card was virtually useless to me...

Cards will be cancelled in about a week once the final statements are produced, and I clear the last bit of interest on them...

Thanks!

KevinM2

Deleted_User said:

It's more to do with the times we're now in and the current state of lending.

Coincidences always seem coincidental.

I do wonder though, what would have happened had I not cleared my balance, and let it sit there at £6000 (of a £7000 limit)...I very much doubt that they would have dropped my limit to £300 and leave a balance of £6000 to be cleared. I simply think they they wanted me to leave (once they wouldn't be getting anything from me), and this was their way of going about it...

[Deleted User]

KevinM2 said:

Deleted_User said:

It's more to do with the times we're now in and the current state of lending.

Coincidences always seem coincidental.

I do wonder though, what would have happened had I not cleared my balance, and let it sit there at £6000 (of a £7000 limit)...I very much doubt that they would have dropped my limit to £300 and leave a balance of £6000 to be cleared. I simply think they they wanted me to leave (once they wouldn't be getting anything from me), and this was their way of going about it...

No, they wouldn't, because they couldn't,  as your balance would have been higher than your limit.

Limit reductions are only applied to unused limits.

They could have cancelled the card entirely, also without giving you a reason.  If they'd simply wanted rid of you, they'd have closed the card long before you got the balance cleared.

vacheron

It sounds to me that newday simply want to limit their exposure to defaulting across the board, so they have instigated the "Boa Constrictor" method of credit control whereby they suck up any unused credit wherever they can and cite the credit check which they are allowed to do and is also very indefinable. 

Certainly a lot better for PR than contacting people and forcing them to repay (which they are also allowed to do, but would be far more damaging publicity wise).

Asghar

You seem to be taking it personally, you shouldn't.

You are just a number to them and they just are reducing their risk exposure in these current times. You can't blame them, they must have had loads of people defaulting on their payments.