Creation Finance credit limit reduction by stealth

AEIOU3

I am interested to hear from anyone else who has had a similar experience as my partner recently with Creation Finance or any other similar company.

My partner has had a Creation Credit card for about 2 years.  My partner puts about £1000 to £1500 a month on the card and pays the entire balance every month.  The card also has a small cash back incentive.

My partner was out shopping recently at a store where my partner historically uses this card.  Surprisingly, the card was refused.  Several attempts were made with no change.  I then paid and we left.

When we arrived back home, my partner called Creation.  The agent (rather rudely) explained my partner’s credit limit on the card had been dramatically reduced.  This is what caused the card to be refused at the store.  We know that credit card companies don’t need to explain their reasons for reducing credit limits.  We also know that credit card companies generally do not like customers who pay their balances every month.

The only question we asked was why Creation did not bother to notify my partner (letter, text, email, etc.) that the credit limit was being reduced.  The agent replied “It was a business decision”.

My partner requested clarification by asking… “Creation’s action to not notify me that the credit limit was being reduced on my credit card two weeks from Christmas was a business decision.  Is that correct?” 

The agent tersely replied “Yes”.

At this point, it was clear not to attempt to appeal to any form of empathy that may lie dormant within this agent with follow-ons like “Do you think this could have placed me a seriously inconvenient position” or “How can a credit card justify such a pro-actively brazen act as a business decision?”.

My partner simply hung up.

Is this act of blindsiding card holders with unannounced credit limit reductions so close to Christmas typical?  Again, my partner and I understand that paying off your balance each month does not make you a valued customer to finance companies.  But how is there any justification in performing the reduction without the decency of a notification?  Can it really be a business decision?  If so, what sort of business model is that?

Thanks for reading.  Happy Holidays to all…even rude, uncompassionate Creation Card agents.

Ebe_Scrooge

There have been many cases of people having their limits reduced.  It is, however, extremely unusual for them not to notify you beforehand.  Are all your contact details with them up to date (email address, phone number, physical address)?  Have you checked your junk email folder to see if there's a notification that got sent there at all?

If you use the card regularly and always pay it off in full, they'll still make money out of you by way of the merchant fees they charge the retailer every time you use it.  So that in itself is unlikely to be the reason.

What kind of percentage of available credit do you typically use each month?  If, say, you've got a £15,000 limit and only ever use £2000 of it, that may be a reason - it costs the bank money to provide a credit facility.  So reducing the limit reduces their costs.

So there are several reasons why limits get reduced - but not being notified of a reduction doesn't sound right.

grumbler

Ebe_Scrooge said:

It is, however, extremely unusual for them not to notify you beforehand.

It's against the T&C, not 'unusual'.

4.1 ... We will notify You of changes to your Credit Limit in writing from time to time. If we increase Your Credit Limit we will give you at least 30 days’ notice. - https://www.creation.co.uk/files/Generic_May_2019.pdf

AEIOU3 said:

The only question we asked was why Creation did not bother to notify my partner (letter, text, email, etc.) that the credit limit was being reduced.  The agent replied “It was a business decision”.

My partner requested clarification by asking… “Creation’s action to not notify me that the credit limit was being reduced on my credit card two weeks from Christmas was a business decision.  Is that correct?” 

The agent tersely replied “Yes”.

IMO, a complaint is due. I'd do this on principle, but they may pay some small compensation.

AEIOU3

Hi - Thanks for your reply.  

1.) Yes all contact details are correct including email, phone, physical address.
2.) No, nothing in spam.  We were expecting the agent to use the "We tried to contact you" line but the agent went straight to "It was a business decision".
3.) Credit limit was £2500.  Partner was using about £1500 of that a month and paying entire balance each time. Credit limit then surreptitiously reduced to £500 in the last few days.    There was not an additional increase in charges on the card due to Christmas.  It was the same charges that happen every month for two years.  If Creation had simply referred to historical usage, the company would have known it would have been an inconvenience.
4.) Agreed that finance companies make money on simply the charges you make.  But those aren't on the level of interest charges and when one factors in the cash back offer perhaps my partner did not offer enough profit to Creation.  That in mind, it still does not explain the lack of notification.

AEIOU3

Thanks grumbler for your reply.  I agree with your comments.  My guess is that if a complaint was made, Creation would say they actually did (upon reflection) attempt to contact my partner by email and that is must have been in my partner's spam folder.  They would go on to say the agent was "mistaken" or "misunderstood your question".   I assure you there was no message in the spam folder.  However, we cannot prove that there wasn't a Creation notification in the spam folder though Creation cannot prove they actually sent the notification in the first place. 

Marchitiello

Creation has been actively exiting the UK credit card market for over a year at least. In the process they have continuously mismanaged existing cardholders, closing accounts, withdrawing rewards etc, all against their own T&C.. apparently the Ombudsman is at full capacity dealing with complaints against Creation but nevertheless I would make my own complaint and follow the process al the way.

If I were in The OP shoes I would raise a complain citing the response you got and how this was against their own T&C (reducing CL without notification) and ask a compensation for the inconvenience as well the immediate reinstatement of my limit until proper notice is served.

for reference, HfP have a dedicated thread… https://www.headforpoints.com/forums/topic/creation-bashing/

Marchitiello

AEIOU3 said:

Thanks grumbler for your reply.  I agree with your comments.  My guess is that if a complaint was made, Creation would say they actually did (upon reflection) attempt to contact my partner by email and that is must have been in my partner's spam folder.  They would go on to say the agent was "mistaken" or "misunderstood your question".   I assure you there was no message in the spam folder.  However, we cannot prove that there wasn't a Creation notification in the spam folder though Creation cannot prove they actually sent the notification in the first place. 

Such an organisation would be asked and can indeed prove if an email went out at what.

The_Urbanite

A credit limit reduction is not so bad. I had three cards with them which had £19.5k of credit between them which were utilised. They decided to shut my accounts with no notice. I’d quite have preferred the limit reduction. Mind you they completely wiped the balances on all the cards as part of the closure and paid £150 compo when I complained, though it seemed they didn’t really understand (or didn’t want to) the complaint I had made. 

martinbainbridge1975

I had a similar experience of bad service with creation, they do not know the meaning of procedures or the difference between right and wrong.  Would certainly log a complaint given their attitude displayed

Marchitiello

The_Urbanite said:

A credit limit reduction is not so bad. I had three cards with them which had £19.5k of credit between them which were utilised. They decided to shut my accounts with no notice. I’d quite have preferred the limit reduction. Mind you they completely wiped the balances on all the cards as part of the closure and paid £150 compo when I complained, though it seemed they didn’t really understand (or didn’t want to) the complaint I had made. 

Do those accounts report as “settled” on your credit file? If not how have they reported it (as I understand you post, they have written off your outstanding balances)?

The_Urbanite

Marchitiello said:

The_Urbanite said:

A credit limit reduction is not so bad. I had three cards with them which had £19.5k of credit between them which were utilised. They decided to shut my accounts with no notice. I’d quite have preferred the limit reduction. Mind you they completely wiped the balances on all the cards as part of the closure and paid £150 compo when I complained, though it seemed they didn’t really understand (or didn’t want to) the complaint I had made. 

Do those accounts report as “settled” on your credit file? If not how have they reported it (as I understand you post, they have written off your outstanding balances)?

Yes, they are marked settled. They put in the letter they sent me that the cleared the balance so I would owe nothing else. 

The accounts being closed doesn’t stop me using them for my own benefit mind. Have to love Creation!