Very low credit limit on pre-approved M&S card

doveman

I applied for a pre-approved M&S credit card so that I could do a 0% balance transfer from my Lloyds credit card. I've received an email which says that my application is approved and I can expect a credit limit of £850, which is far too low to do my balance transfer (£2000), let alone use it for anything else.

My gross income is about £35k, and my Lloyds credit card has a £3,000 limit. I've also got a RBS card with a £4,000 limit, but I haven't used that in over a year and I want to close that account once I have a new card. So in total, my currently available credit is £7,000 and I'm using about 30% of it.

Is there any reason why M&S would offer me such a low credit limit, and is there anything I can do to get them to change this before I accept the offer? I'm reluctant to accept it and then try asking them to up the limit, because if they refuse I'll have an additional card on my credit report that I can't use, and if I close that account I believe I'll be unable to apply for another card from the same bank for a year or so, so it might be better to decline the offer and apply elsewhere.

eskbanker

Each lender will have their own proprietary and unpublished underwriting algorithms, so they won't explain the calculation they'll have used to derive the £850 limit and won't increase that in the short term.

Best bet would be to take the card and BT up to its limit - now that you've presumably gone through the hard credit check there's no point in rejecting the card, but you could always apply for another?

jefaz07

It’s a strange one and I was in the same boat. I was offered the full 29 month (I think) balance transfer duration from Barclaycard. The limit, however, was £600, useless really. 

I do have other CC’s….one with a 10k limit paid off in full every month and a current balance transfer card with about 5k left to TF on it. 

Hoenir

Always advisable to close down unused cards. Wait a while before reapplying. As the reason for closure won't be apparent. 

CliveOfIndia

doveman said:

I can expect a credit limit of £850, which is far too low to do my balance transfer (£2000), let alone use it for anything else.

As stated by eskbanker, transfer what you can - it'll still save you money in terms of lower interest payments.

But as regards your statement about using it for anything else - it's never a good idea to spend on a BT card unless you have read and fully understood the T&Cs.

There are a minority of cards where you can use it for spending as well, but as a general rule you mustn't spend on them.  Otherwise you'll be charged interest on the spending (even if you repay the "spending" portion of the debt) because you're not clearing the balance in full at the end of the month.

retiredbanker1

Hoenir said:

Always advisable to close down unused cards. Wait a while before reapplying. As the reason for closure won't be apparent. 

I would argue that this is wrong.
I have several cards with nothing owing on them and get regular balance/money transfers from them.

Hoenir

retiredbanker1 said:

Hoenir said:

Always advisable to close down unused cards. Wait a while before reapplying. As the reason for closure won't be apparent. 

I would argue that this is wrong.
I have several cards with nothing owing on them and get regular balance/money transfers from them.

Given the OP's position then it might be worth trying.  As "I" is unfortunately not a one size fits all.  Nor will your circumstances or credit history be identical. Likewise credit card company's will be approaching this with very different high level policies in place. 

eskbanker

Hoenir said:

retiredbanker1 said:

Hoenir said:

Always advisable to close down unused cards. Wait a while before reapplying. As the reason for closure won't be apparent. 

I would argue that this is wrong.
I have several cards with nothing owing on them and get regular balance/money transfers from them.

Given the OP's position then it might be worth trying.  As "I" is unfortunately not a one size fits all.  Nor will your circumstances or credit history be identical. Likewise credit card company's will be approaching this with very different high level policies in place. 

So what you meant was "Always Sometimes advisable to close down unused cards"?!

doveman

eskbanker said:

Each lender will have their own proprietary and unpublished underwriting algorithms, so they won't explain the calculation they'll have used to derive the £850 limit and won't increase that in the short term.

Best bet would be to take the card and BT up to its limit - now that you've presumably gone through the hard credit check there's no point in rejecting the card, but you could always apply for another?

I take your point about the hard credit check having already been done, but that shouldn't really be a problem if I reject the card, close my old RBS card, and then reapply in a month or so would it?

There doesn't seem much point in accepting the card, when the credit limit is too low for me to use it as intended.

doveman

jefaz07 said:

It’s a strange one and I was in the same boat. I was offered the full 29 month (I think) balance transfer duration from Barclaycard. The limit, however, was £600, useless really. 

I do have other CC’s….one with a 10k limit paid off in full every month and a current balance transfer card with about 5k left to TF on it. 

The agreement they've sent me to sign says 0% on purchases for 20 months but for balance transfers its only 0% for 12 months on any BT done within 90 days of the account opening, so rather useless for me.

The agreement doesn't actually specify the credit limit, it just says they'll tell me what it is once the account is opened. It was the email they sent me with the link to sign the agreement that says "The credit limit you can expect is £850.00, we'll confirm your limit once we've opened your account", but I assume they've said that because that's the limit they plan to give and they haven't just picked a random figure out of the air.

doveman

Hoenir said:

Always advisable to close down unused cards. Wait a while before reapplying. As the reason for closure won't be apparent. 

Thanks, I'll probably do that and hopefully they'll offer me a higher limit next time.