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

[moutonfou]

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?

Just because it’s there doesn’t mean you HAVE to use it. They’re a business, they exist to make money, of course they are going to try to tempt you. I have no sympathy with people who waste money on credit cards (I’m not talking about genuine poverty, where you need to borrow to pay the gas bill, sort of thing) and then complain that they can’t pay it back. If you can’t afford it, don’t spend it!

reet- I had my credit card cancelled- they wrote to me saying they no longer wanted my business!

I have the credit card for 15 years, always paid iff in full, ultimately my available credit went up to 18K.
I haven't used it at all for 5 years now and my account has been terminated.

I'm trying to improve my credit rating so I only spend on essentials on my credit card and then clear the balance in full. They've increased my credit limit several times and I like that they do it. They always write and give the option for me to call and request that it isn't increased, but if I don't call then it gets increased automatically. I don't really like calling them so it works best for me this way. Having unutilised credit available looks better on my credit record as it shows I'm not spending up to my maximum limit. I don't feel tempted to spend more than I can afford on it, I just pay for my normal spending on it and then pay it off in full to avoid paying any interest.

This regularly happens to me and my DH as we always pay our cards off in full every month. Its happened gradually over many years. A while ago we totted it up and our total combined credit card limit was £70,000 which is completely ridiculous. However it's totally irrelevant to us as we would never spend more than we could pay off the following month. I don't think we can blame the banks if people spend more than they can afford.

Whilst i do have sympathy that it can be hard to not be tempted - people cannot abdicate responsibility for spending because its credit they didn't ask for.

I think it is an issue in todays society that people always look for someone else to blame - ie "I ran up £20k of debt because the bank offered my the credit so i used it because i could".

Not "i ran up £20k of debt because i couldn't restrain myself and forgot i'd have to pay it back".

My bank (Nationwide) write to me asking if I want to increase my limit - I have to phone them to accept it . I think they do it every year. I always pay it off in full every month. And I always accept the increase. If you want to make a purchase on line I think it is the safest way of doing it as you have the card guarantee etc and there is a limit to how much money they can take -the card limit.
Definitely safer than bank transfer with no guarantees etc.
And I am always a bit cagey about using my debit card as they could empty my account -not that I have that much in my current account but I could end up bouncing payments, going overdrawn etc before I realise what has happened - I know I should get it back but more hassle. They have your money you have to get back - with a credit card they have the bank's money...

I like having a largish limit -so I always accept the increase - on my old card (with a bigger limit) I bought a kitchen...I had the money in the bank but used the card for the reasons stated.
I only have two issues with credit cards.
One although I have savings, own a house (no mortgage etc), have a fantastic record for being responsible with one - apparently I couldn't get a credit card now as I am not working full time - or at least not earning a lot of money. (They would let me be named/have a joint one with my partner...)
Secondly I got caught out getting holiday money - ordering online from Tescos. They advertised no credit card charges -so I used it for the reasons above. But according to the bank it was a cash withdrawal so I got charged for the withdrawal and interest on the cash advance etc. Not sure exactly how they work it out but even though I paid it off in full it still spread over a couple of statements -the last interest amount being for 1p!!! It did say in the Tesco small print your bank might charge you ...but I didn't read that bit.

It just made the fantastic exchange rate not so fantastic but not worse than airport rates- and a lesson learned -I won't do that again.

@speakout ha, I best remind him to keep making that annual purchase. I recognise the value of having available credit, personally, but the level of trust is low shall we say...

I pay mine off every month and have gradually accrued a massive credit limit as a result. My OH's lack of credit history worked against us buying first house so I keep doing it - I am not obliged to use allowance so don't spend what I can't pay - and it's there should it ever come in useful for a large purchase.

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

Yes, but there is a benefit to having a low limit which is that it does slightly protect you from fraud: if there's very little slack in your account then fraudulent spending shows up quicker.

That said, I think it's prudent where possible to have enough credit available for a taxi ride, couple of nights in a hotel and pyjamas/clean pants at the supermarket.

Offering credit to those who are not, or should not be credit worthy is everyone's problem.

It's not as easy as "banks are there to make money" OR "if you can't pay it back don't spend it"

Ultimately bad debt costs everyone money.

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

No, its not remotely shocking. Banks exist to make money, so they want to make interest off you. You want the credit facility. It's a win win situation.
If you struggle to pay off the money you have chosen to spend, that is your fault, not theirs. And if you don't want a higher credit limit, just say so. Nobody is forcing you to use it.

pipistrell
Offering credit to those who are not, or should not be credit worthy is everyone's problem.

What definition of "credit worthy" are you using?
Who is doing this?

I don't know how uoi think the cc company canake money out of people who in full each month of course they want, in fact need people not to

Cheap/easy/free credit.

Payday loans, huge credit card limits, no credit checks before you're offered a card, offering 18 year old cards with huge limits, 100% mortgages, over 50s rip off life insurance plans.

Not to mention all of the definitely NOT above board sharp practice which goes on (I'm thinking specifically of when my disabled 16 year old was sent a cc offer through the post from one well known bank)

All that shizz. Shit craply regulated poor practice.

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.

This is exactly why it should be down to the consumer to ask for a credit limit, not for the banks to give them away freely.

And banks do have a responsibility to lend responsibly, so proper credit checks etc should always be carried out.

It is bad business for banks and for society if they lend money to people who can't afford it or who aren't able to be responsible with money. I'm not saying it isn't the consumers fault, but hopefully if consumers asks for credit rather than banks handing it out, the consumer will but more thought into whether it's worth it and more importantly why they want the credit.

FlowerPot ALL the banks are doing it, because it is common practice and in fact how the UK economy works. Flogging credit whereever you can, get people spending to oil the cogs of the economy.

Perhaps you don't see it because it's everywhere. It's the UK norm.

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

Absolutely! It's not like the banks have any moral responsibility and they're hardly going to fuck up entire national economies through irresponsible lending. The very thought, it could never happen. Oh wait.........

The bank is at fault because they ENCOURAGE lack of self restrain and debts.
It’s like they actually prey on people who have issues with some money making it look like it’s oh ever so easy to get £xxx. In effect, the system is build in the idea that you want to have debt on your CC
When actually people who have lots of cumulative debts should be encourage NOT to take even more debts.

Another way to look at it, if you were to take a loan for £10k or £20k, you wouod have to jump through hoops, show you can make the repayments and you might well be rejected.
So why is it that yu can do exactely the same thing with a CC with no checks at all on whether you can afford it and interest rates that are usually much higher (which make it harder to repay the loan)???

I think the reason is easy. Because that way banks make more money at the expense of those customers who wouldn’t get a loan otherwise....

pipistrell
FlowerPot ALL the banks are doing it

So you are saying ALL the banks are giving credit to those who are not credit worthy? Could you provide evidence of this?

Flogging credit whereever you can, get people spending to oil the cogs of the economy.

How precisely does a bank providing an non-credit worthy individual with credit oil the cogs of the economy?

Also, I refer back to my previous question to you - what definition of "credit worthy" are you using?

It is bad business for banks and for society if they lend money to people who can't afford it

Actually you will find that it’s very good business for the banks to do that because they will a hell of a lot money interest paid back to them than if people were taking a loan or were paying in time because they can actually afford it.
Never ever doubt that a bank will do something that is deterimental to its final financial result....

Just like the baby formula companies were out to make money by give months of free supply to people in the 3rd world they were a business so was just making money its not there fault 100s if babies starved to death because people used the free product and their breast milk dried up.

Oh wait it was there fucking fault and is one of the few times the entire world as out right banned something completely aka no special offers or advertising for formula all down to scumbaf companies that still excist to nestle being a major one....

Aka the people didnt have to use there product gets my absolute goat a company should not be bloody dangling temptations in front of people that could harm.

How precisely does a bank providing an non-credit worthy individual with credit oil the cogs of the economy?

Are you serious? By giving them a credit card to buy stuff with!

Where I live you can't get a credit card from your bank until they have monitored your account for three months and seen your salary going in.

Your credit card is then automatically paid off in full every month by DD from your current account.

Until quite recently, Barclaycard style credit cards which allow you to make a minimum monthly payment were illegal.

Mortgages are much harder to come by.

This is one of the most successful world economies.

Just because the UK unregulated style of economy is all you have ever known (Thatcher's children :)) doesn't make it either good or the right method to adopt.

You don't have to use the credit limit and as an adult should be responsible enough to spend within your means.

You can ask them to reduce it and put a stop on auto increases

Pipstrell
Are you serious? By giving them a credit card to buy stuff with!

I'm very serious. Because you do realise that the operations of the economy at both micro and macro levels and general economic management is rather more complicated and intricate than some people buying stuff on their credit cards?