The logic behind "reducing credit limit because of high utilisation"

Alex9384

Deleted_User said:

I have a barclaycard BT (platinum) card, I use it regularly as they do long offers, they keep upping my limit and I keep taking advantage.

So how do you use yours? Also around 90% of the limit?

Alex9384

Sandtree said:

 Being near your credit limit across all your cards can show you are in a spiralling debt situation and therefore some will start cutting your limits

Well, I'm not near limit across all my cards, only Barclaycard. I have in total 6 credit cards and 1 charge card.
I wanted to close down the charge card in June. I hope they're not going to (mis)interpret it as difficulties? Geez... Currently have £6 balance on it.

The second highest utilisation is Lloyds with 67% utilisation after I increased its limit from 8k to 9k in April, at the same time I'm paying it off. It's also on promotional rate till 2023.

My highest limit on another card is £11000 with £400 (3.6% util.) balance on it (also on promotional rate), which will be paid off to zero till August.

Other 3 cards have varying utilisation each month as I pay off the balance off in full. Those range from 0% to 6-7%.

Alex9384

I'm thinking whether to close down my Amex Platinum CC with £7000 limit in November/December after the cashback is redeemed. The main reason is that I want to take advantage of their introductory 5% cashback again after 2 years.

Will some genius at Barclaycard see that as difficulties after receiving monthly feed from CRAs?

Obviously, my total available credit will go down from 44k to 37k, bringing overall utilisation at that time a bit higher.

I would also close down the card with 11k limit but that might cause some hysteria among my other lenders so probably will keep it at least till 2023.

Alex9384

Sandtree said:

This is what Tesco did to me.

Banks have an increasing responsibility to be a responsible lender...

Did Tesco reduce your limit multiple times? Or what exactly happened if you don't mind telling me more.

Brie

Watch out in case they reduce your limit again drastically once you reach the end of the 0% transfer period.  That's what they did to me.  Reduced my limit by about 90%.  Granted it was high - nearly £20k but they dropped it to well under £2k and no offers of any sort.

Alex9384

Brie said:

Watch out in case they reduce your limit again drastically once you reach the end of the 0% transfer period.  That's what they did to me.  Reduced my limit by about 90%.  Granted it was high - nearly £20k but they dropped it to well under £2k and no offers of any sort.

Hm.. Did you have any problems repaying it?
It seems like they're giving offers to people and then don't like it when people accept it.

[Deleted User]

Alex9384 said:

Deleted_User said:

I have a barclaycard BT (platinum) card, I use it regularly as they do long offers, they keep upping my limit and I keep taking advantage.

So how do you use yours? Also around 90% of the limit?

Currently 85.7% paying down, it will be around 77.9% when the limit is increased. All my offers are paid off before they end and when another card I have is paid off I will be upping this one to clear about £400 a month off it to get it cleared off but always paying more than minimum

callum9999

Alex9384 said:

I'm thinking whether to close down my Amex Platinum CC with £7000 limit in November/December after the cashback is redeemed. The main reason is that I want to take advantage of their introductory 5% cashback again after 2 years.

Will some genius at Barclaycard see that as difficulties after receiving monthly feed from CRAs?

Obviously, my total available credit will go down from 44k to 37k, bringing overall utilisation at that time a bit higher.

I would also close down the card with 11k limit but that might cause some hysteria among my other lenders so probably will keep it at least till 2023.

Maybe, probably not. People often imagine what they think a credit card company might think about X, Y or Z without actually having any evidence that they do.

It seems incredibly unlikely that they would ever have someone look through your credit report month by month looking for credit limit drops and then blindly assume any drops are because you're struggling (and wouldn't do so automatically as it's far too crude) - not least because they can very clearly see that you are paying the right amount, are on a promotional rate and always pay on time. Likewise, they don't blindly assume that if you close a perfectly managed credit card then it must be because you're struggling. People talk a lot of nonsense about what credit card companies think about credit report changes on here, I wouldn't pay much attention.

Their actions due to your utilisation rate are also perfectly rational. It's irrelevant that it increases it further - it reduces their exposure to loss.