MBNA CC limit dropped by almost 12k to £75

pecunianonolet

Hi,

As per title, got 2 CC with MBNA with combined limit of the two cards of just around 18k. One card had a ca 12k limit and has now been reduced to a limit of £75 without any warning or notice. Just got a text and the rate was applied over night. 

The other CC has a promotional 0% BT on that runs out on the 12th and the outstanding amount is going to be repaid in full (stoozing).

A drop of almost 12k will make my utilisation jump massively and in turn wreck my score, or better put negatively impact my file a lot.

Always on time payment via DD, they increased limits in the past when I never asked for it. 

In all fairness, the 12k card has been last used around a year ago when they offered a money transfer and I took almost 30k from them and moved it on to other cards for stoozing so the card was repaid swiftly. Not used the card since for any transactions or spending, which I guess was a mistake. 

Handed in a complaint now and asked for it to be reinstated or £200 in compensation for the issues it will likely cause me in the future in my ability to get other credit cards or overdrafts, etc. Not much hope but worth a try to see if they budge.

Just wonder why £75 limit, they could have just closed it down straight away.

Got other cards I not really use and I am now thinking that I should probably start to rotate and pay council tax with a different CC each month and of course repay in full to prevent more drops.

Any experiences or recommendations? 

eskbanker

pecunianonolet said:

In all fairness, the 12k card has been last used around a year ago when they offered a money transfer and I took almost 30k from them and moved it on to other cards for stoozing so the card was repaid swiftly. Not used the card since for any transactions or spending, which I guess was a mistake. 

Sounds likely that they've decided that it's not in their interests to offer a substantial credit facility that isn't used, which isn't an unreasonable position on the face of it.

Unless you're running non-promotional balances elsewhere, there shouldn't be any reason to be taking any notice of utilisation percentages?

CliveOfIndia

pecunianonolet said:

A drop of almost 12k will make my utilisation jump massively and in turn wreck my score

Utilisation percentage doesn't matter at all (despite what the CRAs would like you to believe), unless you're carrying interest-bearing debt from one month to the next.  And any change in your meaningless score is totally immaterial.

pecunianonolet said:

In all fairness, the 12k card has been last used around a year ago when they offered a money transfer and I took almost 30k from them and moved it on to other cards for stoozing so the card was repaid swiftly. Not used the card since for any transactions or spending, which I guess was a mistake.

That's likely the reason.  There's a cost to the bank in keeping open a line of credit for you to use - if you're not using it, they'll reduce it to reduce their costs.  Also, to a certain extent it allows them to re-allocate that credit to another customer who will use it - any bank has a finite amount of credit which they can lend.

pecunianonolet said:

Handed in a complaint now and asked for it to be reinstated or £200 in compensation for the issues it will likely cause me in the future in my ability to get other credit cards or overdrafts, etc.

How have you arrived at the figure of £200?  A compensation claim is only valid for actual and quantifiable financial losses.  In and of itself, a reduction in credit limit will have a miniscule - or more likely, zero - effect on future credit applications.  You have zero grounds for a compensation claim.

pecunianonolet said:

Got other cards I not really use and I am now thinking that I should probably start to rotate and pay council tax with a different CC each month and of course repay in full to prevent more drops.

That's a good idea if you want to keep the cards available for use.  Most lenders will close the card anyway after a prolonged period of disuse.

Volcane

I’d agree with the above…. Sounds like they’ve withdrawn a large credit facility that wasn’t being used, and that could be offered to another customer(s).

Let us know how your complaint is resolved.

pecunianonolet

Total CC limits across 8 cards of just under 60k.

4 cards still have 0% BT promotions on with MBNA ending on Monday. The other 3 end July, October and November. All of them are stoozing money so I am not at risk should any of them demand their cash tomorrow.

Current utilisation is ca 35%. MBNA is going to 0 on Monday but with this huge drop in credit limit (still very high overall) it bumps utilisation way above 50% and with it being a high impact factor it will make me look bad in the eyes of lenders. At least this is what CRA's say and write everywhere.

In turn the score (I know meaningless number) and my creditworthiness go down. I was just about to recover from a "poor" level to "good", according to the meaningless score numbers CRA tell me. It was anticipated when I started the stoozing bonanza.

This makes me think that I may have difficulties getting interest free overdrafts (more stoozing) or any current accounts switch offers in the future, although not many left I can use as I used them almost all last year. Other CC I don't want to think about just now, unless other good offers are too good to leave behind.

Whether I have any ground on a complaint or not may or may not be debatable. I have been rather successful winning most of my complaints in the past ending up making a good cut. The figure of £200 is a conservative figure based on potentially lost interest (10k stoozing @5% = £500 interest).

I made it clear in my complaint, that my focus was on repaying existing debt first before I start to use the other CC so I not pile up more. Aside of that, MBNA incentives for using the card are none. My Sainsbury CC at least gives me a few Nectar points.

The very least I would have expected, if there are no grounds for keeping the credit, even 50% of it, would have been some sort of notice and not just dropping it overnight. Giving me a card with £75 limit is a joke on it's own.

EDIT:

Chat response:

We've reviewed a number of factors on your card account including spend, payments, account history, other products you hold with Lloyds Banking Group and your external Credit File that the Credit Reference Agency shares with us. Unfortunately I can't provide a specific reason.
I understand your dissatisfaction and I will raise this as a complaint. After investigating, I can't uphold the complaint as there hasn't been a bank error. Please be assured that all recorded complaints provide us with useful feedback and may help with future changes to our services.
Are you happy for me to close your complaint?

I am not happy for it to be closed so it will be escalated.

CliveOfIndia

pecunianonolet said:

 it bumps utilisation way above 50% and with it being a high impact factor it will make me look bad in the eyes of lenders. At least this is what CRA's say and write everywhere.

As I said before, what the CRAs are saying and writing is utter rubbish.  A lender doesn't care how much of your available credit you're using, just as long as you're paying it off every month.

pecunianonolet said:

In turn the score (I know meaningless number) and my creditworthiness go down. I was just about to recover from a "poor" level to "good", according to the meaningless score numbers CRA tell me.

You have just confirmed that you understand the score is meaningless.  So why on earth are you fretting about it?  Likewise for the CRA's assessment of your credit-worthiness.  If they were the ones lending you money then it would be a different matter, but they ain't.  Ignore their score/credit-worthiness rating and just make sure that the data they hold on you are factually accurate.

CliveOfIndia

pecunianonolet said:

EDIT:

Chat response:

We've reviewed a number of factors on your card account including spend, payments, account history, other products you hold with Lloyds Banking Group and your external Credit File that the Credit Reference Agency shares with us. Unfortunately I can't provide a specific reason.
I understand your dissatisfaction and I will raise this as a complaint. After investigating, I can't uphold the complaint as there hasn't been a bank error. Please be assured that all recorded complaints provide us with useful feedback and may help with future changes to our services.
Are you happy for me to close your complaint?

I am not happy for it to be closed so it will be escalated.

I'd be interested to hear the basis of your complaint/escalation.  Bear in mind that credit is a privilege, not a right - any bank is at liberty to choose whether or not they want to do business with someone, just so long as that choice is not based on age/race/sexuality/any other protected characteristic.

eskbanker

pecunianonolet said:

The very least I would have expected, if there are no grounds for keeping the credit, even 50% of it, would have been some sort of notice and not just dropping it overnight. Giving me a card with £75 limit is a joke on it's own.

Surely it's not difficult to predict what would happen if card companies gave advance notice of limit reductions?!

pecunianonolet

CliveOfIndia said:

pecunianonolet said:

 it bumps utilisation way above 50% and with it being a high impact factor it will make me look bad in the eyes of lenders. At least this is what CRA's say and write everywhere.

As I said before, what the CRAs are saying and writing is utter rubbish.  A lender doesn't care how much of your available credit you're using, just as long as you're paying it off every month.

pecunianonolet said:

In turn the score (I know meaningless number) and my creditworthiness go down. I was just about to recover from a "poor" level to "good", according to the meaningless score numbers CRA tell me.

You have just confirmed that you understand the score is meaningless.  So why on earth are you fretting about it?  Likewise for the CRA's assessment of your credit-worthiness.  If they were the ones lending you money then it would be a different matter, but they ain't.  Ignore their score/credit-worthiness rating and just make sure that the data they hold on you are factually accurate.

Nationwide didn't allow OH and I last year to open a joint current account, however we both had no issue opening individual accounts and I was given interest free overdraft as well. When we both complained it turned out that it was declined because too much credit used. They said it is because of being overindebeted when our household income far exceeds that. They used data from CRA to make that assessment so I doubt the utilisation percentage used being utter rubbish. I have that from NW in writing.

I never had a late or missing payment ever and the CRA's data is what lenders use. Sure, they all run their own algorithms. 

What concerns me is that this is LBG, they closed last year my Halifax current account and didn't allow me a reg saver, yet I was able to keep an easy access saver I never used since. 

I wonder if there is a connection. 

Anyhow, somebody at MBNA will get in touch so at least I may be able to explain my view of things. 

Edit: Which? also talks about having some sort of effect 
https://www.which.co.uk/news/article/barclaycard-reduces-credit-card-spending-limits-your-rights-if-youve-been-affected-akW9E7e8H81H

booneruk

I'd be more inclined to believe lenders consider disposable income vs debt, rather than any form of utilisation.

Edi81

Outside their risk appetite. 

Credit card limits cost them money. You aren’t going to get a penny compensation.