Credit Limit Reduction

KeithGG

Hi peeps, I have had my credit limit radically reduced on a couple of my credit cards. I’m not quite sure why this has happened as I have had these cards for years, always make acceptable repayments on time (not necessarily the full outstanding amount always but that’s my choice), I have no other outstanding debt, I paid of my mortgage over 20 years ago. Admittedly, I don’t use credit cards much these days for purchases and I’m wondering if they’re punishing me for that. Any ideas folks? K

[Deleted User]

No one gets punished via credit limit.

You may have more credit than they judge you need. There's only a fixed amount of limit that can be handed out so there's no point in using it on customers who don't need it.

Grumpy_chap

KeithGG said:

Hi peeps, I have had my credit limit radically reduced on a couple of my credit cards. I’m not quite sure why this has happened as I have had these cards for years, always make acceptable repayments on time (not necessarily the full outstanding amount always but that’s my choice), I have no other outstanding debt, I paid of my mortgage over 20 years ago. Admittedly, I don’t use credit cards much these days for purchases and I’m wondering if they’re punishing me for that. Any ideas folks? K

There have been several reports of similar and across several card providers.

They are not "punishing" you for have balances that are not used, but the card providers are managing their risks and also their own credit lines.  

There have also been revisions to the rules where credit providers have sought to clarify information in connection with KYC (Know Your Customer) rules and some individuals have taken exception to that, judging by threads on here.  For the card provider, if they see a large facility unused then reducing it may be seen as the least hassle route.

Edi81

Which providers?
barclays cut a lot of limits earlier this year. 

What people don’t realise is the limit isn’t free for the lender. They need to ensure they have liquid assets available to cover the potential spend customers can make. Reducing limits is a fairly easy way for banks to improve their margins ever so slightly. 

kaMelo

Edi81 said:

Which providers?
barclays cut a lot of limits earlier this year. 

What people don’t realise is the limit isn’t free for the lender. They need to ensure they have liquid assets available to cover the potential spend customers can make. Reducing limits is a fairly easy way for banks to improve their margins ever so slightly. 

The multi million pound fine from the FCA  and millions in redress payments to customers for unaffordable lending practices will have focused their minds also, hence the multiple "Barclays slashed my credit limit" posts.

Thrugelmir

Do you need to credit facility?  The days of offering endless amounts of credit are over. Lenders, as has been the case with mortgages, are now being targeted to lend responsibly. For major purchases a loan is often cheaper. Also provides the discipline to repay.