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"Millions see their credit card limits cut"

By admin | April 16th, 2009 | Credit Cards

According to a recent report millions of people in the UK have seen their credit card limits cut as a result of credit card companies doing their best claw back money in the current financial climate.

It is claimed that over the past six months millions of credit cardholders have seen their credit limits cut by an average of £2000. Around 2.7 million cardholders are said to have had their credit limits cut in the past six months, and this equates to around 50 percent more than during the same period the previous year.

Industry experts have estimated that the average credit limit cut was £1960, and that these credit limit cuts managed to claw back over £5 billion for credit card providers.

The Internet financial giant Egg hit the headlines last year after it slashed limits or even cancelled the accounts of tens of thousands of cardholders, claiming that they were high risk customers even though many had clearly got flawless credit histories. A number of other lenders have made similar moved, and this includes First Direct, Beneficial, and Barclaycard.

One industry expert said: ‘Overstretched borrowers are seeing their credit lifelines withdrawn. With unemployment on the up, card companies are looking to claw back debt quicker than ever before. It is not just those who have debt problems who are being targeted – there’s plenty of evidence that people with good credit records are being hit often because they don’t use their card enough as far as lenders are concerned.’

He added: ‘They say they are being responsible lenders by cutting limits which makes sense for them as businesses but the reductions can be a massive shock for borrowers many of whom are being entirely responsible. While limits could be cut at any point, anybody relying on a credit card needs to reassess their finances.’

Tags: credit card companies, credit card limits

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