UK banks accused of arbitrarily hiking credit limits of six mn customers without permission: study
18 November 2017
The last year has seen as many as six million people have their credit card limit increased, without being asked, according to a study. The study also showed that people who are least confident of paying the debt they owed are most likely to be given extra credit.
According to the charity Citizens Advice, which conducted the research, on average, credit card holders were given rises of £1,481 without being asked, and that around 12 per cent of people received an increase of £3,000 or more.
This comes even as 85 per cent of people think that credit card companies should always ask permission before increasing someone's limit, according to the charity.
Around 32 per cent of people who said that they were not confident they would be able to pay back their current debts received a rise, as against 23 per cent who said that they were.
''It's clear that credit card companies are contributing to the rise in consumer debt,'' said Gillian Guy, chief executive of Citizens Advice, said.
''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,'' she added.
''Few consumers support unsolicited increases and our research shows that they make people's debt problems worse,'' Guy said.
According to figures of Citizens Advice, card companies are lending too freely and putting people at risk as a third of people already who were struggling financially were given higher credit limits.
In the past year 8.4 million card holders had credit limits increased, but just one in four actually asked for it.
Average increases were seen at £1,481 and one in 10 were £3,000 or more.
Citizens Advice wants that the chancellor announce a ban on unsolicited credit limit increases in his Budget statement next week, to protect vulnerable people.
Guy said, ''It's clear that 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.''