We'd like to remind Forumites to please avoid political debate on the Forum. This is to keep it a safe and useful space for MoneySaving discussions. Threads that are - or become - political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.

MBNA CC limit dropped by almost 12k to £75

2

Comments

  • BoGoF
    BoGoF Posts: 7,098 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    OP is going the right way to have his accounts closed. Nobody has to lend to you.
  • BoGoF said:
    OP is going the right way to have his accounts closed. Nobody has to lend to you.
    And I don't want to do business with institutions doing such shady practises either. If they don't want to lend to me they should have just closed the card straight away and not leave me with the joke of 75 quid. That's not even enough to do a weekly shop on CC. 

    If they are disappointed that I didn't use their card, they could have warned me like other institutions do about the inactivity. 

    Anyhow, the outstanding amount is paid, I wait for the complaints team to contact me to discuss and maybe there is a sensible explanation. 

    My other so far unused cards will see now more spending of a banana or an apple here and there. 

    The funny part, in other countries I lived before it's the opposite, you get rewarded and improve your creditworthiness by not using the card or credit. Using your cc all the time is seen as negative and not able to manage your budget.

    Will update again after I had a chat with them, a good conversation between humans sometimes goes a long way.
  • BoGoF
    BoGoF Posts: 7,098 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    So are you really spending on a 'bananna or apple here and there' on your other cards? You really have bought into the hype haven't you?
  • Hoenir
    Hoenir Posts: 5,604 Forumite
    1,000 Posts First Anniversary Name Dropper
    BoGoF said:
    OP is going the right way to have his accounts closed. Nobody has to lend to you.
    And I don't want to do business with institutions doing such shady practises either. If they don't want to lend to me they should have just closed the card straight away and not leave me with the joke of 75 quid. That's not even enough to do a weekly shop on CC. 


    You've still £48k of credit facilty granted to you. Perhaps ease off the melodramatics. As not going to portray you as a responsible borrower in the eyes of financial institutions. "Shady practices" will be more than adequately covered in the terms and conditions you accepted in opening the account. 
  • pecunianonolet
    pecunianonolet Posts: 1,550 Forumite
    1,000 Posts Second Anniversary Photogenic Name Dropper
    edited 10 February 2024 at 12:26AM
    BoGoF said:
    So are you really spending on a 'bananna or apple here and there' on your other cards? You really have bought into the hype haven't you?
    Yes, I sometimes buy 1 banana at my lunch break or one apple and so far used any copper to fill self checkout tills or my main credit card. For my Coop refer a friend incentive I bought 5 bananas with my debit card, one after another on a self checkout till to meet the 5 transaction requirement. For my TSB monthly reward I make 20 x 0.01 paypal friends and family transaction. If I now need some more spending and transactions for my credit cards that banana or apple will do me. All via Google Pay so I don't have to carry the cards with me. Not sure what hype you are talking about and what should be wrong about it? 

    Hoenir said:
    BoGoF said:
    OP is going the right way to have his accounts closed. Nobody has to lend to you.
    And I don't want to do business with institutions doing such shady practises either. If they don't want to lend to me they should have just closed the card straight away and not leave me with the joke of 75 quid. That's not even enough to do a weekly shop on CC. 


    You've still £48k of credit facilty granted to you. Perhaps ease off the melodramatics. As not going to portray you as a responsible borrower in the eyes of financial institutions. "Shady practices" will be more than adequately covered in the terms and conditions you accepted in opening the account. 
    It's not about the 48k of credit left or being unable to afford the weekly shop. Also nothing to do with melodramatics. Lots of people with very different problems so I am privileged that I was given such high lending limits.

    I had until around a year ago only 2 credit cards, one with my main bank and another as backup with an overall limit of around 10k or less. When stoozing became attractive again MBNA offered me at the same time free money transfers. I opened a 3rd card, got a good limit, took the cash and put it on the free BT card. Applied for the next one, high limit and did it again. The last credit card I took out gave me the lowest limit which was "only" 4k. I also had no other fee free zero interest BT cards left to use. At some point in between MBNA even gave me a second BT credit card so I transferred cash from MBNA to another card and back from there to MBNA. In between this they even raised the limit on the card with the MT offer. None of all my cards in my life ever had a missed or late payment and when the promotional period is up the funds go back in full. 

    Perhaps very opportunistic but that's how capitalism works and I aim to maximise my profit in the same way as the lender also aims to maximise their profit. 

    If MBNA has done whatever reviews and seen that I have not used the limit they gave me and seen I was inactiv with this card they do have every right to reduce the limit but that is not the point here. What annoys me is the sudden drop from high to unusable low. Yes, I am partly responsible for it. Also the impact it will have to how my credit file will look like and how other lenders perceive me in the future, what products or offers I may or may not be able to get. 

    https://www.equifax.com/personal/education/credit-cards/articles/-/learn/inactive-credit-card-account-closed/#:~:text=because of inactivity.-,How does this affect my credit history?,of credit available to you.

    https://www.experian.com/blogs/ask-experian/credit-education/score-basics/credit-utilization-rate/#:~:text=Revolving credit utilization is an,utilization can affect credit scores.

    What really strikes my nerve is that if they move from an almost 12k credit limit and leave 75 quid on a card, why did they even bother and not just close it down completely? There is still the other card with the promotion coming to an end on Monday so a potential to make money of me if I would not be able to repay in full. Which luckily I am able to do and did earlier. A card with such a low limit is not worth it anyhow so I may ask them to shift all my limit to the older card and close the second one. No point in having a card I can't really use and also a little less plastic in the drawer.

    If they would have gone from 12k and drop it by 50%, see if this sparks activity on my side and if not lower again by 50% in 3 months or so and close it after I would be totally fine with it. Or would deliver a message and say, we have lowered your limit as our review has shown no activity of xx months so we deem this as not necessary it would be very different. Yesterday the limit was still there, today I received a simple text message it has been lowered and they will send a letter. 

    When interest rates were low the amount of offers I got from all sorts of banks for loans and other lending products was unreal. Literally every week something else. It all just looks shady to me as it is coming exactly at the time when the BT promotion is about to end. Why now, why not 6 or 3 months ago or why not in 1 month. I just don't believe it is coincidence.

    And what concerns the compensation, you are all right, I don't really have much or as some said any grounds, but I am still annoyed about it all. At least it gives me an opportunity to speak to somebody qualified to provide my view of things and I will also most likely get more out of it by speaking to human not having to rely just on a automated text and auto generated letter. I got compensation offered for far less in the past where my complaint was raised not with any intent of getting money and just about getting something sorted. Well, with them all so generous in paying compensation there is no harm in putting a number out to see what happens. 
  • elasto
    elasto Posts: 35 Forumite
    Second Anniversary 10 Posts
    edited 10 February 2024 at 9:19AM
    Don't take it all so personally.

    One time I applied for two credit cards the same day: The first gave me a £200 credit limit, the second gave me five figures. Should I have been insulted by the one that gave me £200?

    Banks have all sorts of reasons for making the decisions they do. They don't always make sense from the outside. 

    One bank might interpret you not using their card as meaning you're a good credit risk and make you more valuable. They might throw offer after offer of 0% balance transfers at you.

    Another might have algorithms that determine that customers of theirs not using their cards are unlikely to do so any time soon, and they are trying to aggressively apportion credit lines to those customers that will.

    It's a lesson to not rely on only one card, but that's not a problem you have.

    It's really not personal. So just forget about it.
  • Everyone taking the side of the banks generally here is pretty weird. Agree they probably reduced it because of inactivity but it's still not great practice to reduce it overnight with no communication.
  • Vinknut
    Vinknut Posts: 93 Forumite
    Fourth Anniversary 10 Posts Name Dropper
    I've had a card limit reduced with not much warning before - just a letter, sent to my home address, whilst I was out of the country, and needed *that* card to pay a hotel bill.  Fortunately I had another card with which to pay with.

    On the topic of utilisation % - I'm afraid that's a non-starter.  They can lend to whoever they want. But, in better news, utilisation is only one thing that lenders look at, because as a figure, unless it's 0%, it means nothing. Is 40% good or bad?

    40% of £1,000 - good or bad?
    40% of £10,000 - good or bad?
    40% of £100,000 - good or bad?
  • elasto
    elasto Posts: 35 Forumite
    Second Anniversary 10 Posts
    Everyone taking the side of the banks generally here is pretty weird. Agree they probably reduced it because of inactivity but it's still not great practice to reduce it overnight with no communication.

    I had a firm reduce one of my credit card limits by 70% last year with no notice. I responded by spending on it for a few months and then requesting the limit be raised again, which they did.

    Realise that that's what has happened to the OP here too: They had two cards with MBNA with a combined limit of 18k and the new combined limit is around 6k. I bet if the OP does what I did then, in time, they can work the limit(s) back up again too, if they care to do so.

    You say they could have warned the OP first, but what were they meant to say?

    For one thing they could get accused of encouraging people to run up debt they can't afford to repay just to keep a credit line open. That might genuinely open them up to having to pay out compensation.

    For another, you're assuming that their requirements are simple to communicate - eg. 'spend £1 on the card this month to keep your £12k credit limit'

    - Maybe it's not £1 that's the trigger, maybe it's 5% that's necessary, or 20%.
    - Maybe they weight paying the deposit on a holiday differently to a weekly food shop for the same amount.
    - Maybe they are cutting credit limits across the board, and the amount they cut everyone by is determined by a highly complex (and highly proprietary) formula based on the last six months' spending, not just the last month's.

    The bottom line is credit is a privilege not a right, which is why the OP will not get any compensation, but they really really also shouldn't take it personally...
  • Right, spoken with them and here is the result:

    - Credit limit reduced due to non use of card
    - Offered to look into it again but it would mean a hard search, basically like a new application, to see if the limit or any other can be restored /upheld
    - Confirmed a letter should have already arrived with me, which it hasn't yet
    - Case handler agreed that a limit of £75 isn't really useful and my question why they not closed the card straight
    away was not answered, even when I asked it again. All I was told is that the bank has every right to reduce a limit, which they indeed have.
    - Was offered to close down the card, I declined for now
    - To merge both credit lines to one card and closing another was declined as impossible
    - Asking if the reduction is a coincidence or deliberate because my promotion coming to an end was answered with "We can't comment on it but you haven't used the card"
    - Case handler was trying to sell me the "positive" that due to the reduction I have now a possibility to get this credit line with another lender and that my credit file and score will not be impacted (which I disagree with) but potentially would be if I would get a hard search.

    My last point I was bringing up is exactly what elasto mentioned, that in order to keep a credit line open I would need to go into more debt, when my priority was to repay the debt I already have. My question if they are encouraging more debt to keep a credit line open vs. responsibility of making sure existing debt is repaid first was where the case handler started to struggle a bit for answers. It was repeated over and over again that I haven't used the card and that the bank has every right to reduce. The case handler said the bank is not at fault but agreed that is not ideal practise and of course vehemently argued that they are a responsible lender, don't want to encourage more debt, etc. 

    My ask for any compensation was first declined but I was offered in the end a a good will one off gesture £25 of compensation because I always paid on time and because repaying existing debt should have priority over spending elsewhere to keep the line open. Case handler repeated once again that they are not at fault, have followed everything in the T&C's and that it is a good will gesture and that they technically not at fault and not need to pay.

    Anyhow, my banana and apple budget for the year is sorted. 

    Thank you, over and out!
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 348.2K Banking & Borrowing
  • 252.1K Reduce Debt & Boost Income
  • 452.3K Spending & Discounts
  • 240.8K Work, Benefits & Business
  • 617K Mortgages, Homes & Bills
  • 175.6K Life & Family
  • 254K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16K Discuss & Feedback
  • 15.1K Coronavirus Support Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.