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AIBU?

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Original poster

Credit Card Help, Can anyone advise?

120 replies

CreditCardHelp · 18/09/2019 13:37

I paid my credit card off in full 2 days ago, and I've just had a text to say they have decreased my limit. I now 2grand vanished into thin air, which is my money to survive on for the next 3 months. I have always paid more than my monthly minimum payments and an advisor I spoke to 4 weeks ago said that my account was looking good and it was being managed really well. As I'm a student, I pay off my balance in full every 3 months when my loan comes through the live on that, always paying my minimum payments off.
My credit score hasn't changed, there is no reason why they would do this. I now have been left 100 pounds to last me 3 months. They have passed it into complaints and say it can take up to 8 weeks to get back to me. Can they do this? The guy on the phone said they may be able to compensate me if it's left me in financial hadrship, which it has. I'm really worried about this now, and worrying that I will have to drop out of uni. They have me no warning that they had any concerns with my account, they just did it today.
Has this happened to anyone and what happened when they reviewed it?

OP posts:
gwenneh · 18/09/2019 13:40

They can decrease your limit at any time, yes. You can ask for the limit to be increased again but they don't have to do it.

GinDaddy · 18/09/2019 13:41

I know this is after the fact, but could I ask why you would pay off your credit card in full, when you have essentially stated you need to live off it? It's a very risky way to operate because it's the company's prerogative to increase or reduce your balance at any time. Would perhaps make more sense to keep aside money for cashflow and pay off whatever you can afford to pay on top.

Anyways that's after the fact, so I would go into the branch if your card is linked to a high street bank; try and get someone to advocate for you perhaps?

Original poster
CreditCardHelp · 18/09/2019 13:43

I've been paying it off in full as it's been the way I've been building up my credit score. Since I took the card out 6 months ago, my credit score has gone up by over 100 points. It's not a highstreet one unfortunately.

OP posts:
GladAllOver · 18/09/2019 13:47

If your credit score has gone up, you should be able to get another credit card to augment or replace this one.

OnlyFoolsnMothers · 18/09/2019 13:48

get another credit card

Original poster
CreditCardHelp · 18/09/2019 13:50

Problem is, if I get another card, my starting limit would be much lower than the one I had built up on this one? Which wouldn't help my situation. The guy from the complaints department said they may be able to compensate me if it's caused financial hardship but I'm not sure what that means.

OP posts:
dementedpixie · 18/09/2019 13:53

What is your limit just now?

GinDaddy · 18/09/2019 13:53

@CreditCardHelp

I understand you're building up your credit score and that's laudable, but you're also panicking about being able to live off a sum that is actually never yours - the bank or firm decides whether they lend and how much.

Your credit score going up by 100 points is great, but what are you going to do with that so to speak, if notionally you're in a position where every month you require it to live?

Is there a less extreme way of doing thing (if you don't mind me suggesting?!) whereby you don't do it in a big whack every three months, thereby leaving yourself vulnerable at times?

sorry if this comes across wrong am just concerned because organisations can leave you at the mercy of them if not careful.

Lockheart · 18/09/2019 13:54

If you're a student, can you get a bar / cleaning / waitressing job? You could earn £2k in 3 months working part time around your studies.

dementedpixie · 18/09/2019 13:54

It's a bit short sighted to live off the credit card when they can ask for money back at any time or cut your limit down

Original poster
CreditCardHelp · 18/09/2019 13:57

My course is full time and I'm a single parent so working is pretty much impossible as I already have to spend out on childcare to cover uni times.
It maybe short sighted, I just never thought that they could take it all away for no apparent reason when I've been managing the account well. I thought the whole point of a credit card was to pay it off in full when you use it?

OP posts:
Purpleartichoke · 18/09/2019 14:34

Generally you pay off in full every month. That way you don’t pay interest.

araiwa · 18/09/2019 14:35

You operating your account well has a completely different view point from the cc company.

They arent making any money off you if youre always paying it off.

Original poster
CreditCardHelp · 18/09/2019 14:41

I pay it completely in full every 3-4 months. My monthly minimum payment is usually around £50, I always pay £200-£300.

OP posts:
dementedpixie · 18/09/2019 14:49

What is your limit?

Original poster
CreditCardHelp · 18/09/2019 15:04

£2000. I paid £1500 2 days ago which paid it off in full.

OP posts:
Hahaha88 · 18/09/2019 15:08

I can tell you, from experience, that there is nothing they have to, or will do about the credit limit. When they say about compensating you they will be talking about £50ish for the inconvenience caused. And you can take it to the financial ombudsman service but they won't change it. Because it's a lending facility, it's not ever guaranteed. If they have reduced it there will be something on your credit report that's resulted in them reducing it, or you'll have missed a payment at some point. Or you're spending a large amount of your credit limit which looks to the bank as though you're struggling which is a risk factor to the bank. I'm sorry but there is literally nothing you can do now. They will not give warning before decreasing a credit limit as that gives you the chance to wack a load of stuff on it thus they can't reduce the limit.
I'm sorry you've learnt this the hard way but you cannot live off a credit card. If you wanted to increase your credit score £20 a month paid in full would have worked the same way

joblotbubble · 18/09/2019 15:13

There isn't anything you can do. You can't force people to lend you money.

IronicalCallSign · 18/09/2019 15:21

Op you seem to be a bit naive about how credit card companies work. If you're using it for living costs, you've been very precarious because they can up or decrease your limit (the amount they'll lend you) on a whim. You aren't generating any profit for them so the way you'd been managing your money makes it look like you don't need that level of lending; I've had the same thing. As well as random "we've just added on an extra 1k to your limit" letters when I put a large purchase on it.

Seriously, stop using your credit card as money in the bank, it's not, it's a theoretical limit on what they'll allow you to borrow as a profit centre of theirs...

Arrowfanatic · 18/09/2019 15:21

If you're using a credit card to improve your credit score you shouldnt spend more than 50% of the limit on it anyway. By going over the limit consistently you look like a risk factor.

hammeringinmyhead · 18/09/2019 15:22

Your usage of your credit allowance is 75% then which is quite high. In times of financial uncertainty they sometimes do this to certain types of customers to lower their risk overall.

Arrowfanatic · 18/09/2019 15:22

Over the 50% i mean, not the total limit

SellmeyourMLMcrap · 18/09/2019 15:30

Hi OP, like everyone has said, they can do this and they reserve the right to, it's in your T&Cs.
I would simply request an increase and see what they say, if they say no and you need this money then just apply for a card elsewhere, as your Credit Score has improved you may well qualify for some better rates.

As for why this has happened there will be several possible reasons, you regularly pay off your full balance, that isn't as profitable for the lenders as those who leave a balance on their cards. There are other reasons but it generally boils down to risk and profitability, if they aren't making enough out of you and consider you are a reasonably high risk then they'll take action such as this.

I hope you manage to sort something.

BarbaraofSeville · 18/09/2019 15:34

They've probably done you a favour, although it won't feel like it right now. Carrying a balance on a 'not high street' credit card is likely to cost a fortune in interest - what's the rate?

Also, the way you talk about the card '2grand vanished into thin air, which is my money to survive on for the next 3 months' probably indicates to them that you're using it to live on, which is not what they're supposed to be for and there's a lot of pressure to help people not pay so much interest and be constantly in debt and unfortunately, one way they will do this is by lowering credit limits.

You could try applying for another card - does your own bank offer an interest free student card or overdraft?

Does your university have a hardship fund or bursaries available - apparently there are all sorts available if you know where to look.

Have you applied for all the benefits, grants and official student loans that you are entitled to as a student who's also a parent?

loobyloo1234 · 18/09/2019 15:37

Can you get an overdraft for now OP through your bank?