Barclaycard has slashed credit limits by thousands of pounds, leaving some customers who have been with it for decades with far less spending power than they had before.
Credit card limits are tailored to individuals. Those with larger incomes and good repayment histories can usually borrow more; but limits can be cut if your circumstances change or you fall behind on repayments.
Yet Barclaycard is reducing how much customers can borrow even when they have never missed a payment.
Barclaycard is reducing how much customers can borrow even when they have never missed a payment
Matthew Gooch, 42, has had a Barclaycard for 24 years and could previously borrow up to £9,000. But last month the provider wrote to say it would be reducing his limit to £2,050.
The university worker’s income rose last year and he has spent less on his card than in previous years.
Barclaycard staff were unable to say why the company was cutting his limit; but after he telephoned to complain, his limit was reduced to £4,500 instead.
Matthew, from Norwich, says: ‘I feel completely let down.’
The move is also peculiar given Barclaycard has been handing out longer interest-free balance transfer terms to customers over the last few months.
Several other Barclaycard customers have complained on social media about the cuts.
One who spoke to This is Money, Louise Porter, shared a letter posted on Friday which said her limit was being cut from £11,900 to £1,650, a reduction of more than 86 per cent.
Louise, 42, from Hampshire, said she had never missed a payment in 20 years and paid off the balance whenever she used it.
‘I sometimes need to use it for a one-off large payment and then pay it off over a year or so and manage to do this without going overdrawn’, she said. ‘This is out of nowhere and not based on any evidence of how I’ve managed my account or finances.’
The letter she was sent told her the reduction, which would take place on 20 May, was to make sure her card was ‘affordable for you.’
One Barclaycard customer’s letter said her credit limit was being cut by 86% ‘to make sure it’s affordable for you’ despite her never missing a payment for 20 years
It added that if she sent an updated income statement, be it a bank statement or a payslip, it could review the change.
‘Annoyingly I’d planned to make a couple of large purchases later in the year and this is a bit of a spanner in the works’, Louise, who was unable to get through to anyone at Barclaycard, said.
‘It’s annoying to have to provide evidence and not know what criteria they’re using or what they’ll decide at the end. I think the affordability argument they’re using is a smokescreen for weeding out non-profitable customers.’
It’s annoying to have to provide evidence and not know what criteria they’re using or what they’ll decide at the end. I think the affordability argument they’re using is a smokescreen for weeding out non-profitable customers.
Louise Porter, Barclaycard customer
The average UK credit limit fell by 49 per cent from January to December last year, according to data from the credit-checking firm ClearScore.
Justin Basini, the chief executive of ClearScore, says: ‘As support packages like payment holidays and the furlough scheme come to an end, some credit card providers have lowered credit limits even further as a way to protect themselves from people who may not be able to pay back money lent to them.’
Bjorn Svenson tweeted the company had ‘wiped £7,000 off my credit limit instantly for no reason’. Asked by This is Money why his limit was cut, he replied: ‘I’ve no idea at all.
‘I’m self employed, have a steady income with no drop in salary, have never missed a payment and always pay above the minimum, had about £4,000 used credit on the card, and £7,500 spare.
‘They’ve now, without any reason, other than responsible lending, cut the limit by £7,000.’
He added: ‘I’m just glad I’m below the new credit limit. I feel sorry for those thousands of pounds above the new limit, who have a month to clear it before being charged.’
Barclaycard charges £12 if customers go over their credit limit.
In contrast, Santander and Virgin Money say they are not reducing any of their customers’ borrowing limits, to support those hit hard by Covid-19.
Last year Virgin Money caused a similar backlash when it suspended the credit cards of thousands of customers during the country’s first lockdown, many of whom had never missed a payment.
The bank changed its mind less than 48 hours afterwards, after the Financial Conduct Authority disapproval at the move.
A Barclaycard spokesman declined to say how many customers have had their limits reduced, adding: ‘As a responsible lender, we continually monitor and adjust our cardholders’ credit limits to ensure they are not borrowing more than they can comfortably afford.’
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