Barclaycard Limit Reduction

Hase2000

I just received a letter from Barclaycard, stating they have reduced my credit limit from £20,000 to £1,250 - a reduction of over 93%. It also just happens that this is under £100 from my current balance, meaning that if I hadn't noticed the change, I could have easily gone overlimit (and incurred the associated fees). I also have seen this behaviour in the past - they will keep lowering the limit every time the bill is paid until it sits at a comically low amount.

No explanation was given. I earn a decent income and always pay my bills on time, including paying this card off in full every month.

I'm thankful that I wasn't overseas at the time, it could have been a disaster if I was reliant on this card.

The only explanation I can give is that I had an erroneous CCJ added to my report last year. It has since been removed from my file and no record of it exists any more. Other than that, there are no issues with my credit file.

I explained this to their customer services, and they made me fill out an appeal form. I got a response half an hour later saying that the decision still stands - I can't imagine anyone actually looked at the form, it was auto-rejected by the computer.

It is very clear that for whatever reason, Barclays no longer wants me as a customer, and is telling me to move my banking elsewhere. Which is a shame, as I have my mortgage there along with a few other products that they are making money from.

In short, very disappointed with Barclays.

eskbanker

Hase2000 said:

It is very clear that for whatever reason, Barclays no longer wants me as a customer, and is telling me to move my banking elsewhere.

That's not clear to this reader, surely they just don't want to offer you so much credit, especially if it was largely unused?  You're obviously free to go elsewhere, but if Barclays really didn't want you as a customer, they'd close the account altogether....

ellenvan

Plus if you always pay your credit card bill in full Barclaycard make nothing at all from your account.

Hase2000

eskbanker said:

Hase2000 said:

It is very clear that for whatever reason, Barclays no longer wants me as a customer, and is telling me to move my banking elsewhere.

That's not clear to this reader, surely they just don't want to offer you so much credit, especially if it was largely unused?  You're obviously free to go elsewhere, but if Barclays really didn't want you as a customer, they'd close the account altogether....

For me, it was the way it was handled by Barclays that has got me worried. I would be more understanding if they had gradually reduced the limit to something more reasonable, or gave some notice before making the change. Leaving less than £100 available with zero notice just feels like a really nasty trap to try and increase revenue through overlimit fees.

Looking at other threads from people who have had random large Barclaycard limit reductions, it appears that once they do this they will keep lowering the limit until it hits £150 - which would be worse than useless, considering the negative effects of having such a low limit on file!

Marmaduke123

Barclaycard do this. They reduced my credit limit to 250 pounds a few years ago, making it useless. I only used it for holidays and always paid it off in full

I just closed the account 

eskbanker

Hase2000 said:
I would be more understanding if they had gradually reduced the limit to something more reasonable, or gave some notice before making the change.

It's pretty obvious what would happen if credit card companies gave advance notice that they were going to reduce limits, hence their decision not to!

zagfles

ellenvan said:

Plus if you always pay your credit card bill in full Barclaycard make nothing at all from your account.

Not this myth again! Of course they do, otherwise they wouldn't incentive people to pay in full by offering them interest free credit. They make money from charging retailers when you use your card. I always pay in full, except when I have a zero interest balance transfer, I've had Barclaycards for decades and I doubt I've paid them a penny in interest. They still seem to want me as a customer and keep increasing my credit limit. 

zagfles

eskbanker said:

Hase2000 said:
I would be more understanding if they had gradually reduced the limit to something more reasonable, or gave some notice before making the change.

It's pretty obvious what would happen if credit card companies gave advance notice that they were going to reduce limits, hence their decision not to!

Yup, if they reduce the limit because they think you're in trouble financially (rightly or wrongly) they're obviously going to do it without notice and to just above what you owe. If they gave notice people could just max it out in the notice period! It would be brain dead to do that!

It's not a "trap" so they can get overlimit fees, it's almost certain they'd waive them if you accidently went over because you hadn't seen the notice, but the payment would likely be declined anyway. 

Hase2000

eskbanker said:

Hase2000 said:
I would be more understanding if they had gradually reduced the limit to something more reasonable, or gave some notice before making the change.

It's pretty obvious what would happen if credit card companies gave advance notice that they were going to reduce limits, hence their decision not to!

Why on earth would anyone actually want to borrow £20,000 at 30% interest? Unless they were already planning to game the system, in which case they would have already maxed out the card and changed address by now.

zagfles

Hase2000 said:

eskbanker said:

Hase2000 said:
I would be more understanding if they had gradually reduced the limit to something more reasonable, or gave some notice before making the change.

It's pretty obvious what would happen if credit card companies gave advance notice that they were going to reduce limits, hence their decision not to!

Why on earth would anyone actually want to borrow £20,000 at 30% interest? Unless they were already planning to game the system, in which case they would have already maxed out the card and changed address by now.

It's not clever people trying to "game the system" or defraud the card company, it's people who get themselves into trouble financially, it's people who don't have a clue what APRs are or what interest rates mean, it's people who just see the "available to spend" amount and don't even think about how they're going to pay it back or how much it'll cost them. 

Plenty of people take out payday loans at far higher APRs. With bank current accounts the nanny regulator told banks not to display an "available balance" which includes overdrafts because some people don't understand that if they go into overdraft they have to pay interest and have to pay it back. Don't underestimate how financially clueless a lot of people are, financial education is very poor in this country. 

eskbanker

Hase2000 said:

eskbanker said:

Hase2000 said:
I would be more understanding if they had gradually reduced the limit to something more reasonable, or gave some notice before making the change.

It's pretty obvious what would happen if credit card companies gave advance notice that they were going to reduce limits, hence their decision not to!

Why on earth would anyone actually want to borrow £20,000 at 30% interest? Unless they were already planning to game the system, in which case they would have already maxed out the card and changed address by now.

Apparently, many people take such decisions personally and feel that they've been slighted, so may overreact rather than dealing with the matter rationally....