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To think banks shouldn't be allowed to do this?

(69 Posts)
moutonfou Thu 09-Nov-17 08:52:48

I've always paid off my credit card fully every month and never accrued interest.

A few months ago I made to the decision to buy a holiday on credit and pay it off over the next few months, thereby accruing a small amount of interest each month, but it suited me as a way of paying.

Yesterday I got a letter out of the blue announcing that my credit limit was being increased by £1000.

So they are deliberately targeting users who (in their eyes) are having more difficulty paying off the balance, and giving them more credit? AIBU to think that's shocking?

AlternativeTentacle Thu 09-Nov-17 08:53:53

yes, they have always done this. that is how they make more money.

LaurieFairyCake Thu 09-Nov-17 08:58:23

Yep, mine is £20k for the same reason hmm
Currently paying off next years holiday

Fluffyears Thu 09-Nov-17 09:16:11

They seem to do it when you do pay in fully. I think it’s to entice you to use more credit that you can’t afford to pay off in one sum then have to pay it off and pay interest. I always call and ask them to reduce the lthem mit back to what it was. It doesn’t really affect me as I try not to use my card or pay it all off but I don’t want them to make decisions on my behalf.

pipistrell Thu 09-Nov-17 09:18:04

Yes it is shit and there should be laws against it.

Sadly the UK economy is built on debt, which is why it will always be "boom and bust"

JennyOnAPlate Thu 09-Nov-17 09:20:55

Yanbu. If we actually used all the credit available to us we wouldn’t be able to afford the repayments.

DunkMeInTomatoSoup Thu 09-Nov-17 09:22:19

The bank is at fault because you have no self restraint?

ZaraW Thu 09-Nov-17 09:23:21

I'm with HSBC I don't have any debt on my card and they actually decreased my limit.

sinceyouask Thu 09-Nov-17 09:24:34

Call them and tell them no thanks.

TheHodgeoftheHedge Thu 09-Nov-17 09:27:40

You can refuse the credit increase. Or just not use it.

wanderings Thu 09-Nov-17 09:29:00

They do this to me. They once started sending me blank cheques (the sort that you pay £££££ to use). I wrote and asked them to stop doing this, as post was sometimes being stolen.

TonicAndTonic Thu 09-Nov-17 09:32:55

It's ethically not great (along with payday loans etc) but banks are unfortunately a business not a public service so they have to make money otherwise credit cards wouldn't exist. And they don't make any money off people that pay off in full every month!

thecatsthecats Thu 09-Nov-17 09:32:59

With a couple of minor exceptions, I have always paid mine off in full too (twice, I think, I have left a small part of my balance unpaid until a max of the next month only). They still up my limit every few months.

I get the sense it's triggered by how much I spend (even if it's all paid off and I never even approach the limit), not by how much I owe.

CurlsandCurves Thu 09-Nov-17 09:33:23

Just because they give it you, doesn’t mean you have to use it.

During the recession, I saw so many tv programmes of people struggling with personal debt. And were blaming the banks for giving them increased overdrafts, credit card limits etc.

They spent the money, not the banks! Banks do not know what you can or cannot afford to manage and pay back. That’s down to the consumer.

kaytee87 Thu 09-Nov-17 09:34:24

They try to increase mine every month and I nearly always pay it off in full. I just phone and tell them no thanks.

specialsubject Thu 09-Nov-17 09:35:39

You can use the credit limit and still pay no interest.

ShatnersBassoon Thu 09-Nov-17 09:36:51

I think you're being a bit daft to be shocked that a business would attempt to maximise profit. If you don't like their practice, don't have credit cards (which essentially rely on people getting into debt they can't pay off quickly).

speakout Thu 09-Nov-17 09:38:46

I don't think they are targeting people who are having difficulty paying off the balance- they are targeting people they can make money from.

BarbaraofSevillle Thu 09-Nov-17 09:39:13

I'm in two minds about this. Just because they give you the credit limit, doesn't mean you have to use it. People have to take personal responsibility and not see a credit card limit as 'free money'.

Used well (and not necessarily how the banks want you to use them) credit cards can be very useful, and even make money for the user, with cashback and by exploiting interest free deals. I'm making hundreds of pounds a year with mine.

And sometimes it can be very useful to have a big credit limit, especially if you get a 0% interest deal. I put about £10k of our extension on a credit card in a roundabout way, which allowed us to take a couple of years to pay it off interest free.

I find the way that they've reduced the minimum payment over the years more annoying, because it takes longer for anyone to notice they are in trouble by finding they cannot meet the minimum payment, by which time they are in enormous debt.

And a few years ago, there were some credit cards where the minimum payment didn't even cover the monthly interest, so paying the minimum was getting people further into debt. When I first got a credit card, the minimum payment was 5% and over time, it's slowly reduced to 1%.

So if you only look at the minimum payment, a £50 minimum used to equal a £1000 debt, but now it might be a £5000 debt. And for the people who have several credit cards and can afford a monthly minimum of a few hundred pounds, they could get into £30/40/50k of debt before they start to not be able to make the minimum payment and realise they have a very big problem.

PineConesAplenty Thu 09-Nov-17 09:41:16

We pay ours in full every month and have never had a debt and they increased ours at least twice.

We asked them to reduce it back down and they did. We have never spent anywhere near what they increased it to.

We have been using that card for about 20 years because it earns us reward points so they have years of data to go off.

Of course they want to encourage spending. It is a business.

FlowerPot1234 Thu 09-Nov-17 09:42:42

The bank has identified that you are taking longer than previously to pay off your outstanding debt and therefore would have less available credit than you did before. So they increase your limit to give you more credit again. If you take it and don't clear it by the end of the month, they earn. If you take it and clear it, they don't. If you don't take it, they don't.

2/3 outcomes they don't earn any interest from offering you this, and you are in 100% control of 3/3 of these options, not them. So, no issue.

disahsterdahling Thu 09-Nov-17 09:50:51

My DH is with HSBC and they've written to him decreasing his limit because he doesn't use it enough.

I rarely use mine, either, but it's nice to have eg if you go on holiday and have a big hotel bill or buy an expensive item.

I didn't know banks were still increasing limits without asking though.

Billben Thu 09-Nov-17 09:51:16

The bank is at fault because you have no self restraint?

This 👍

reetgood Thu 09-Nov-17 09:53:12

They also target users who don’t carry a balance. We’ve improved our financial management over the past few years, and my partner took out a credit card for better value exchange when travelling. We pay the balance in full, but now he rarely uses it. He used to end up paying £30 a month in charges to use a £100 overdraft facility, They’ve raised his credit limit and keep writing to him about their great value loans. We take it as an indication that we’re a less risky bet now to make money off through lending. It’s still a nope from us.

The thing that irritates me is banks exploiting the perception of them as a source of financial knowledge. They are a business that want to sell product, that’s all. I went through a period of my old bank repeatedly pushing me to make an appointment for a financial check up as part of their ‘helpful banking’ push. I eventually got them to stop by asking if this check up involved selling me any more of their products, as I was not interested. They did not make my life particularly easy when I was in financial distress, and I never forgot it. I paid back my overdraft and promptly closed my account. It was a good day!

1Mother20152015 Thu 09-Nov-17 09:54:13

I think it's bad practice. Mine is about £10k on each card (!!) and I just about never put a penny on it and ditto approved bank over draft (which I never use). My adult child kept getting this too and has deliberately forced the bank to reduce it to £500 and that was not that easy as you have to make the effort to request it.

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