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| Six million receive unsolicited increase on credit card limit | Six million receive unsolicited increase on credit card limit |
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| Citizens Advice raises concerns that lenders ‘actively pushing’ debt on to those who cannot afford it | |
| Jill Treanor | |
| Fri 17 Nov 2017 00.01 GMT | |
| Last modified on Mon 27 Nov 2017 13.37 GMT | |
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| Six million credit card customers had their borrowing limits increased in the last year without being asked by their card provider, according to research by Citizens Advice, which is calling for the government to stop such unsolicited rises. | Six million credit card customers had their borrowing limits increased in the last year without being asked by their card provider, according to research by Citizens Advice, which is calling for the government to stop such unsolicited rises. |
| The charity said that one in three of those customers whose credit limits were increased without their consent were showing signs of struggling financially, causing concern that the debt burden on the most vulnerable is increasing. | The charity said that one in three of those customers whose credit limits were increased without their consent were showing signs of struggling financially, causing concern that the debt burden on the most vulnerable is increasing. |
| Gillian Guy, chief executive of Citizens Advice, said the research – based on a survey carried out earlier this month – showed that credit card companies were contributing to the increase in consumer debt. | Gillian Guy, chief executive of Citizens Advice, said the research – based on a survey carried out earlier this month – showed that credit card companies were contributing to the increase in consumer debt. |
| The level of consumer debt in the UK – which includes credit cards, personal loans and car financing – has reached £200bn for the first time since the 2008 financial crisis. MPs on the Treasury select committee have begun a formal inquiry into household debt while the Bank of England has warned that the banking sector could lose £30bn on consumer lending if interest rates and unemployment rise sharply. | The level of consumer debt in the UK – which includes credit cards, personal loans and car financing – has reached £200bn for the first time since the 2008 financial crisis. MPs on the Treasury select committee have begun a formal inquiry into household debt while the Bank of England has warned that the banking sector could lose £30bn on consumer lending if interest rates and unemployment rise sharply. |
| According to Citizens Advice, 8.4 million credit customers had their limits increased in the last year – around 28% of credit card holders – but only one in four had asked for the extra borrowing facility. Its survey found that credit card holders were given, on average, rises of £1,481 without being asked. One in 10 people (12%) received increases of £3,000 or more. | According to Citizens Advice, 8.4 million credit customers had their limits increased in the last year – around 28% of credit card holders – but only one in four had asked for the extra borrowing facility. Its survey found that credit card holders were given, on average, rises of £1,481 without being asked. One in 10 people (12%) received increases of £3,000 or more. |
| Guy said: “Rather than credit cardholders 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 that they make people’s debt problems worse.” | Guy said: “Rather than credit cardholders 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 that they make people’s debt problems worse.” |
| She said Philip Hammond, who is due to deliver his budget next week, should step in to “prevent credit card companies weighing people down with unwanted debt – particularly when they are already struggling to keep their heads above water”. | She said Philip Hammond, who is due to deliver his budget next week, should step in to “prevent credit card companies weighing people down with unwanted debt – particularly when they are already struggling to keep their heads above water”. |
| The credit card providers have voluntarily agreed with the City regulator, the Financial Conduct Authority, that they will ask customers before increasing limits. | The credit card providers have voluntarily agreed with the City regulator, the Financial Conduct Authority, that they will ask customers before increasing limits. |
| A financial industry lobby group, UK Finance, said credit card companies were “completely committed to responsible lending … The industry is committed to helping the minority of cardholders who do not use a credit card in a way which is in their best interests,” said Richard Koch, head of cards at UK Finance. | A financial industry lobby group, UK Finance, said credit card companies were “completely committed to responsible lending … The industry is committed to helping the minority of cardholders who do not use a credit card in a way which is in their best interests,” said Richard Koch, head of cards at UK Finance. |
| Labour has announced proposals to limit rate charges on cards so that borrowers would not have to pay back more than twice the amount of their credit card borrowings. Citizens Advice’s survey was conducted online with ComRes and involved 2,033 adults between 8 and 9 November 2017, with 1,332 having credit cards. | Labour has announced proposals to limit rate charges on cards so that borrowers would not have to pay back more than twice the amount of their credit card borrowings. Citizens Advice’s survey was conducted online with ComRes and involved 2,033 adults between 8 and 9 November 2017, with 1,332 having credit cards. |
| Credit cards | |
| Banks and building societies | |
| Borrowing & debt | |
| Consumer spending | |
| Consumer affairs | |
| news | |
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