Credit card companies curb spending limits
Credit card companies have clawed back some £3.1bn worth of credit by cutting the spending limits of their customers, according to MoneyExpert.com.
The independent financial comparison website says around 1.8 million credit card customers have had their credit limit reduced in the past six months by their card provider, with the average reduction around £1,600.
The research is yet more evidence of the clampdown by credit card companies on customers who they fear may not be able to repay debts, and MoneyExpert.com is warning that more pain could be on the way.
Sean Gardner, spokesperson for MoneyExpert.com, said: “Overstretched consumers might look to resort to credit in a bid to make ends meet but they should not rely on it as a way of keeping spending.
“Credit card companies are becoming stricter in who they lend to and the amount of money their customers can borrow.
“The credit card market is competitive as people turn to interest free deals to tide them over some tough economic conditions. And there’s nothing inherently wrong with taking advantage of a 0% credit card for a year as long as spending is controlled.
According to the MoneyExpert.com figures, 4% of all British adults have had their credit limit cut in the past six months, amounting to around 1.8 million customers.
Typically customers who had their credit limits reduced saw their limit cut by £500 or less. And the MoneyExpert.com research shows that 47% of credit limit cuts are no more than £1,000. But with some 15% of those experiencing reductions having their spending limits cut by more than £2,500, the average reduction is £1,680.
Gardner added: “Our switching index shows that around 980,000 people switch credit card provider each month. With so many people needing credit to you have to wonder whether they are managing their money well or merely papering over some serious financial cracks.”