First Direct decreased my credit limit

edwinab

I got a letter today telling me that my credit limit had been reduced from £1200 to £500, effective immediately.

I always pay my account in full at the end of the month, and have never missed a payment! So I am a bit shocked they would just do it, with no consultation.

I like having the higher limit to allow me to book long haul flights & holidays from time to time, so I feel a bit grrr about it all.

Has this happened to anyone else?

pauli

This happened to me last year with Barclaycard from £5000 to £500 with no warning at all - the letter arrived 2 weeks after they did it!

At the time I used to either pay in full or pay well over the minimum (my circumstances have since changed somewhat :rolleyes: ) so I took it a bit personally but after posting on here found out it had happened to loads of other people too.

Unfortunately I think this is something that will become more common in the coming months, and I think it's maybe them wanting to reduce lending to customers who don't earn them much money i.e by paying in full every month and also to reduce their risk in lending to customers they feel may potentially get into difficulty.

One thing Barlcaycard said to me at the time after I complained was that I could wait 6 months then apply for my limit to be increased but that they couldn't guarantee anything - you could maybe try that?

Bismarck

guess we're in for an interesting few months....I had an increse to an already high limit from out-of -the blue

"credit where it's due"......really? IS that an invitation to spend more money that I've not got....

why don't they just send out messages saying, "look, try saving next time before you buy, you pillock"

oh yes...because they want you in debt for ever....how very considerate

Tribulation

I just dont get these credit card companies.

We had a period where due to my ill health we got into a lot of debt, had defaults and was on a CAB debt plan. Within 5 weeks of finally paying it off, while feeling depressed, I applied for a credit card (in my wifes name with me as a joint card holder), I asked her first, she laughed and said we would never get one with our credit history, a few weeks later we received one with a £2500 limit, the following month it was increased to £3500 and the following month it was increased to £4500. That is with a completely crap credit rating, me on incapacity benefit and my wife just going self employed as a mobile hairdresser (and telling the total truth, no lies or exaggerations at all) .

She phoned them up and asked for it to be decreased to £2000 and we are happily managing our finances.


Personally, while we're managing our finances well, I don't think there's any way under the sun that we should have been given a card. The temptation was there for us to spend spend spend, luckily my wife is a much stronger person than me and made sure we had a limit that we could afford. While it's true we are managing our finances, the £4500 limit was simply too high for what we were earning and had it been 10 years ago I suspect we would have had the best intentions not to use it, but within a few months have owed them £4500 which we wouldn't have been able to afford.

Zazen999

Tribulation wrote: »

I just dont get these credit card companies.

I do

Interest payments and default payments make them more money.

Easy and simple.

Louisepp

There's a report on the BBC website about this

http://news.bbc.co.uk/1/hi/uk/7236171.stm

toomanyshoes

First Direct reduced mine last year from £6400 to £3200.

They then reduced it again when I had taken the balance down further (effectively making me unable to spend on the card).

With various 0% deals I have now cleared the card and reduced it myself down to £800 which I now pay off every month as part of a generally pulling up of my own financial socks - I have been your typical live beyond your means/dont look too closely at your bills consumer which was followed by a period of caring for a terminally ill relative meaning I couldn't work so much (I am self employed), hence things went a bit tits up.

I've been given and refused loads of credit over the years and IME, First Direct has always been most responsible with their lending decisions.

If all banks and institution were like them, I think we'd all be in a better position economically.

Dylanwing

Seems to be two areas they are cracking down on, the 'potential bad debts', although by looking at credit reports, they are trying to make a judgement without full facts. The other part is the unprofitable customers, reducing a lot of the limit that is normally unused. As with the earlier poster, a lot of customers affected use the card for holidays to get the protection, and then pay off the balance immediately to avoid the interest. From a business point of view, it looks a bad deal for the Bank, but if credit card companies offer these services, what do they expect? Maybe they need to look at their Business Model and products so that the services match customer needs. Maybe it will also mean that the 'careful' customers have to pay a little to cover the Banks costs, but shops charge you for the actual goods/ services you buy/ use, so why do we expect Banks to be different?

edwinab

I agree that FD are on the whole responsible, however it seems illogical to me to reduce credit limits with no notice; and to do so for people who are on top of their repayments. For eg, my incomings on my FD account look paultry, but I have other accounts with wages coming in, so if I had been consulted I could have either explained this, or been tempted to move all my business over. It doesn't engender loyalty to the bank, which I assume they want to create

Do credit decreases affect your credit rating BTW?

Tribulation

edwinab wrote: »

Do credit decreases affect your credit rating BTW?

That's an interesting question.

What about if you apply elsewhere for credit and it asks you about your other cards

eg: Credit Limit, Outstanding Balance

Unless you lie, your credit limit is going to be way under what you actually owe, making you look irresponsible.

benf90

Tribulation wrote: »

That's an interesting question.

What about if you apply elsewhere for credit and it asks you about your other cards

eg: Credit Limit, Outstanding Balance

Unless you lie, your credit limit is going to be way under what you actually owe, making you look irresponsible.

But the credit limit hasn't been reduced to below the current balance. They've waited until the latest payment has gone through and then reduced the limit, preventing further spending. So the credit limit is still more than the balance and will stay that way unless the person overspends etc.

To someone else who asked about credit files etc... if anything it is likely to have a positive affect I reckon. It means there's less available credit for the person to use so lenders may feel it is less of a risk to approve an application, i.e. the higher credit limits people have the more 'risk' there is they could max out all cards/overdrafts etc and get into difficulty.