There have been a number of recent reports that have highlighted the various tactics that credit card firms have been using of late to try and maximise their profits whilst reducing their risks, such as cutting the credit limits of some customers, withdrawing credit card facilities altogether, or raising interest rates and fees for no apparent reason. Another recent report claimed that some credit card firms were adjusting credit limits on cards for different age groups.

The report claimed that some credit card providers were increasing the credit limits on cards for many younger consumers, even though younger cardholders are often free and easy with their spending and therefore more likely to get into spiralling debt with their credit cards. On the other hand, the firms have been cutting the credit limits of older customers who have become used to dealing with debt and are often less likely to see their spending spiral out of control.

Figures from a report released earlier this year indicated that around 12% of cardholders in the UK had seen the credit limits on their cards cut, and 7% had suffered withdrawal of their credit card facilities altogether. Consumers aged between thirty four and forty nine years of age seem to have borne the brunt of these credit limit cuts and credit card withdrawals, as around 17% of those within this age group have said that they have had their credit limits cut on their credit cards.

Figures also showed that around 14% of those in their later twenties had seen the credit limits on their credit cards cut. However, on the other hand in the 18-25 age group 14% claim that they have been given additional benefits and facilities by their credit card companies, and 41% of those given additional facilities had seen their credit limits increased by 50%. Yes, it is often those aged around 18-20 that overspend on credit cards, as they are getting used to the freedom and flexibility of having a credit card.

One industry official said: “It seems that banks are sending out confusing signals to consumers as the credit crunch unfolds. On the one hand, they are slashing credit limits to older consumers who have become accustomed to credit. But on the other hand, they are increasing credit limits for younger consumers at a time when we need to practice greater financial discipline.”

He also predicted that secured lending levels would rise significantly by 2012, adding: “And it seems that by reducing available unsecured credit for older customers, banks are leading these customers towards secured loans. There are indications that lenders are pulling down the shutters for some customers, and holding the door open wide for others. But consumers must avoid getting their fingers trapped in the credit crunch because what banks give with one hand they can easily take away with the other.”

Recent Additions:

• Kids are also suffering as a result of the global credit crunch
• Don’t be slack about credit card security
• Effects of the credit crunch set to get worse
• Many relying on credit cards to pay for basic breakdowns
• More ways to cut back on your spending