Credit Card Companies Lowering Spending Limits
Credit cards companies are slowly getting back the money they have lost by cutting many of the spending limits away from their customers. MoneyExpert.com – a financial comparison website – stated that around 1.8 million credit card customers have had their spending limit amount reduced over the past six months by their respective card providers. The average reduction has been close to the amount of £1,600.
The research is more evidence of the clampdown by credit card companies on customers who they fear may not be able to repay debts. Sean Gardner of 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 very competitive as people turn to interest-free deals to tide them over some tough economic conditions. And there’s nothing wrong with taking advantage of a zero per cent credit card as long as spending is controlled. “The warning lights should be shining brightly however if you find you’re going from card to card without making a dent in the amount you owe. If you don’t have a repayment plan in place it is time to get one.”
According to the MoneyExpert.com figures, 4 per cent 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 almost half of credit limit cuts are no more than £1,000. But with some 15 per cent of those experiencing reductions having their spending limits cut by more than £2,500, the average reduction is £1,680.
Sean Gardner added: “Our Switching Index shows that around 980,000 people switch credit card provider each month. With so many people needing credit, you have to wonder whether they are managing their money well or merely papering over some serious financial cracks. “However it is almost always the case that you will save money by switching to a new credit card.