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Credit Cards & Loans

Millions have credit card limit increased without their consent

Paloma Kubiak
Written By:
Paloma Kubiak

Credit card companies are lending ‘too freely’ as people are having their credit limits hiked without even asking to borrow more.

Six million people have had their credit limit increased in the last year without even asking for it.

The average amount given was £1,481, but one in 10 people received an increase of £3,000 or more, despite the majority of those believing the credit card company should always ask permission before increasing the spend limit.

The research from charity Citizens Advice, found that credit card companies are pushing credit on millions who can’t pay as 32% were found to have received the additional allowance even though they were struggling financially.

It said credit card companies are lending ‘too freely’ and are putting people and the wider economy at risk if they’re unable to pay down the debt.

In total, 8.4 million people (28%) received a credit limit increase but only a quarter (23%) asked for it, meaning the remaining three quarters had the raise initiated by their credit card companies.

The regulator, the Financial Conduct Authority (FCA) has agreed with credit card providers that they will start asking new customers for their consent before raising limits. Existing customers will be given the option to ask their lender to require their consent.

But given the Budget next week, Citizens Advice is urging the Chancellor to ban unsolicited increases altogether.

Gillian Guy, chief executive of Citizens Advice, said: “It’s clear credit card companies are contributing to the rise in consumer debt.

“Rather than credit card holders seeking to take on more debts, lenders are actively pushing it on people without enough consideration as to who can afford to pay and who can’t.

“Few consumers support unsolicited increases and our research shows they make people’s debt problems worse.”

Positive effect of credit limit rise

Alastair Douglas, CEO at credit comparison site TotallyMoney, said a credit limit rise can give customers greater flexibility but it’s important people still manage their finances responsibly.

“Lenders like to see you are managing your borrowing sensibly. Paying off your balance in full each month and staying well within your current limit will show lenders you’re reliable and responsible.

“This builds a level of trust in terms of borrowing and repayments. Every lender will judge each customer individually and take into account their personal circumstances.

“If the lender increases your limit, it can lead to an increase in your credit score as it’s seen as a mark of trust.”