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Barclaycard Slashes Credit Limits

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GeoffF100
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Barclaycard Slashes Credit Limits

#405861

Postby GeoffF100 » April 21st, 2021, 3:36 pm

Barclaycard has been slashing credit limits:

https://www.thisismoney.co.uk/money/car ... straw.html

I opened a Barclaycard Rewards card recently. I was asked for proof of income, and sent them my HMRC tax calculation. I have got above average income and got a limit of £3,500, which appears to be about the average for credit cards. I pay off my card by Direct debit each month, so that is more than enough for me. BNP Paribas was much more stingy with my old Asda credit card. I had to chase them to get a usable limit. Barclaycard has not cut my limit, yet, at least.

dealtn
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Re: Barclaycard Slashes Credit Limits

#405873

Postby dealtn » April 21st, 2021, 4:21 pm

It's not a particularly well written article so hard to establish the complaint here.

It is difficult for credit card companies to reduce credit limits below the amount of debt, particularly core debt. An accusation that the credit card company has lent too much, and is reducing limits to claw back this lending, doesn't sound right to me.

More likely credit card companies are looking to reduce unutilised credit. These limits create large conditional exposures, which from a provider's perspective have capital costs attached to them, and are also assessed by the regulator as potential exposures. Cutting back on these save capital, and associated costs. I doubt such an explanation is as exciting to the media though, but quite possibly the reason behind the large numbers, and percentages quoted.

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Re: Barclaycard Slashes Credit Limits

#405875

Postby Lootman » April 21st, 2021, 4:27 pm

dealtn wrote:More likely credit card companies are looking to reduce unutilised credit. These limits create large conditional exposures, which from a provider's perspective have capital costs attached to them, and are also assessed by the regulator as potential exposures. Cutting back on these save capital, and associated costs. I doubt such an explanation is as exciting to the media though, but quite possibly the reason behind the large numbers, and percentages quoted.

Yes, the only time this happened to me, with a NatWest card, the letter explicitly stated that it was because I was not using it much and was only using a relatively small percentage of my credit line. I also paid it off every month, so they weren't making much money out of me.

The credit card I use all the time, on the other hand, has had its credit limit increased a few times, and without me asking. The limit currently is £40,000.

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Re: Barclaycard Slashes Credit Limits

#405898

Postby Alaric » April 21st, 2021, 6:13 pm

dealtn wrote:More likely credit card companies are looking to reduce unutilised credit. These limits create large conditional exposures, which from a provider's perspective have capital costs attached to them, and are also assessed by the regulator as potential exposures. Cutting back on these save capital, and associated costs. I doubt such an explanation is as exciting to the media though, but quite possibly the reason behind the large numbers, and percentages quoted.


That's what Natwest did a while back, but they didn't slash credit limits so far as to make the card next to useless.

Barclaycard are however still advertising, presumably to attract new cardholders.

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Re: Barclaycard Slashes Credit Limits

#406003

Postby Maylix » April 22nd, 2021, 1:02 am

GeoffF100 wrote:Barclaycard has been slashing credit limits:

https://www.thisismoney.co.uk/money/car ... straw.html

I opened a Barclaycard Rewards card recently. I was asked for proof of income, and sent them my HMRC tax calculation. I have got above average income and got a limit of £3,500, which appears to be about the average for credit cards. I pay off my card by Direct debit each month, so that is more than enough for me. BNP Paribas was much more stingy with my old Asda credit card. I had to chase them to get a usable limit. Barclaycard has not cut my limit, yet, at least.


In case it helps someone... Barclaycard wrote to me and said the were going to reduce my limit from £10,000 to £2,000 as I wasn't utilising the full limit and £2,000 was the most I'd used in 2 years. They gave me 2 weeks warning, so I called them up well before the two weeks and asked them to reduce it from £10,00 to £5,000 immediately, which they did. The 2 week deadline came and went and my card has retained the £5,000 limit.

HTH
Maylix

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Re: Barclaycard Slashes Credit Limits

#406098

Postby Sobraon » April 22nd, 2021, 11:33 am

Why do people put up with this nonsense? Barclay Card are clearly telling people that they don't want their business and if their sclerotic management haven't got the message from the media coverage of this issue then this is evidence of much bigger problems in the company.

Twenty years ago I moved to American Express as my main credit card provider and on the occasions that I have rung them up the customer services people are always pleasant, helpful and get things done on the first call. Unless they are excellent actors I have the firm impression that they like working for AMEZ! My credit limit is 4x my the maximum monthly spend I have ever put on the card and I pay the charges in full each month. I admit that I need a 'back-up' credit card for the companies whose POS terminals cant use AMEX but these are becoming rarer.

The AMEX card I use has a points system and last year I 'earned' enough points to replace a very old failing microwave with a new one and 'upgrade' my daughter's 'NutriBullet', unfortunately I wasn't able to use my free airport lounge pass though! Oh just to add the way Mrs S and I use our accounts means we never pay Membership fees to AMEX.

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Re: Barclaycard Slashes Credit Limits

#406117

Postby Dod101 » April 22nd, 2021, 12:28 pm

Sobraon wrote:Why do people put up with this nonsense? Barclay Card are clearly telling people that they don't want their business and if their sclerotic management haven't got the message from the media coverage of this issue then this is evidence of much bigger problems in the company.

Twenty years ago I moved to American Express as my main credit card provider and on the occasions that I have rung them up the customer services people are always pleasant, helpful and get things done on the first call. Unless they are excellent actors I have the firm impression that they like working for AMEZ! My credit limit is 4x my the maximum monthly spend I have ever put on the card and I pay the charges in full each month. I admit that I need a 'back-up' credit card for the companies whose POS terminals cant use AMEX but these are becoming rarer.

The AMEX card I use has a points system and last year I 'earned' enough points to replace a very old failing microwave with a new one and 'upgrade' my daughter's 'NutriBullet', unfortunately I wasn't able to use my free airport lounge pass though! Oh just to add the way Mrs S and I use our accounts means we never pay Membership fees to AMEX.


Not everyone accepts Amex apart from anything else.

Dod

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Re: Barclaycard Slashes Credit Limits

#406119

Postby JohnB » April 22nd, 2021, 12:32 pm

BC have not contacted me about my £10k limit, when normally I spend <£1k/month on the card even in holiday season, and its been <£200/month for much of last year. But I'd be annoyed if they did reduce it, and I'd have to plead to get it back, especially as being FIRE I have not want to jump through income proving hoops.

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Re: Barclaycard Slashes Credit Limits

#406410

Postby GeoffF100 » April 23rd, 2021, 7:44 am

JohnB wrote:BC have not contacted me about my £10k limit, when normally I spend <£1k/month on the card even in holiday season, and its been <£200/month for much of last year. But I'd be annoyed if they did reduce it, and I'd have to plead to get it back, especially as being FIRE I have not want to jump through income proving hoops.

There are plenty of alternatives, but in present conditions the providers are unlikely to give you a big limit without proof of income. With interest rates so low, interest free credit for a month or so is of little value. It is good to have Consumer Credit Act protection for purchases, and nice to have living expenses on a separate account. It is also good to have both MasterCard and Visa cards with separate banks in case of IT failure. Nonetheless, I may end up just using a debit card.

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Re: Barclaycard Slashes Credit Limits

#408814

Postby gt94sss2 » May 2nd, 2021, 7:12 pm

Barclays (and no doubt other banks) are reviewing their risk appetite given Covid-19 and the ending of government support schemes/the economic environment. There is also a cost to credit card firms to allocate a credit limit to customers which is unused.

There are also two other things which are specific to Barclays that might come into play.

a) Last year, an internal Barclaycard review found it had set limits to high for lots of customers given their financial circumstances, leading to lots of people getting refunds for interest, fees and charges etc. as a result.

b) Barclays were fined by the FCA last year, for not treating customers in financial difficulty correctly. As well as the £26 million fine, I understand this has cost them several 100 million to rectify.


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