Credit Card News Credit Card Companies Cut Limits By 5 29billion In 6 Months 3067
Credit card companies cut limits by £5.29billion in 6 months
12 March 2009 / by Rachael Stiles
The comparison website found that 2.7 million credit card customers have had their credit limit reduced as part of providers’ attempts to cut back on lending as credit remains tight.
“Overstretched borrowers are seeing their credit lifelines withdrawn.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.” said Sean Gardner, director of MoneyExpert.com.
Credit card customers have found that, on average, their credit limits have been cut by £1,960 in the last six months, amounting to a total £5.29billion reduction in available consumer credit.
And the number of people finding that their credit limit has been reduced is accelerating, MoneyExpert said – 1.8 million credit card holders had their limit cut in the six months leading up March 2008, nearly one million less than in the past six months.
The amount that credit limits are being cut by has also increased, the research revealed, with the average customer finding they had £1,600 less credit available to them last March, a cut more than £300 smaller than that faced by customers in the last six months.
Almost 40 per cent of reductions equated to a cut of £500 or less, and 25 per cent amounted to less than £1,000, but more than 10 per cent suffered cuts of £5,000 or more.
“It is not just those who have debt problems who are being targeted,” Mr Gardner continued, “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.
“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,” he said.
But those who have credit card debt they cannot shift should not lose hope, as there are still options available, Mr Gardner added.
“Switching to a zero per cent balance transfer can make repayments more manageable,” he reassured worried consumers. “Both Abbey and Virgin Money continue to offer a fifteen month balance transfer cards while a number of others offer twelve or thirteen month cards.”
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