Credit card companies pushing credit on millions of people who can’t pay

by | 19 January 2018 | Citizens Advice, Retford, Worksop

People who don’t think they can pay their debts, are being given thousand of pounds of credit they haven’t asked for, Citizens Advice warns. Fresh evidence from the charity suggests that six million people have had their credit limit increased in the last year without their consent — and 32% of those showing signs of struggling financially were given a rise.

On average, credit card holders were given rises of £1,481 without being asked, with one in 10 people (12%), receiving increases of £3,000 or more. This is despite 85% of people thinking that credit card companies should always ask permission before increasing someone’s limit.

The figures show that credit card companies are not only lending too freely, but putting individuals and the wider economy at risk if people are unable to pay down their debts.

Research carried out for Citizens Advice shows that in the last 12 months, 28% of credit card holders (8.4 million people), received a credit limit increase.

However, only one in four (23%) credit card holders who were given a rise, actually asked for it — the remaining three in four limit raises were initiated by credit card companies.

Worryingly, credit card holders who aren’t confident they can pay their current debts are more likely to have been given extra credit. 32% of people who aren’t confident they can pay back their current debts were given a rise, in comparison to 23% who were.

The Financial Conduct Authority (FCA) has agreed with credit card providers that they will start asking new customers for their consent before raising limits, and give them the option to carry on receiving uninvited increases. Existing customers will be given the option to ask their lender to require their consent.

With three quarters of credit limit increases initiated by credit card companies and low demand from customers, Citizens Advice is concerned that credit card companies will be unwilling to ask permission from their existing customers before raising limits.

For information and advice, contact Citizens Advice Bassetlaw on their telephone service, 03444 111 444. A drop-in service is available at the Worksop office based in The Annexe, Queens Building, Potter Street, Worksop (next to the Savoy Cinema) on Mondays and Wednesdays from 9.30am to 3.00pm and on Fridays from 9.30am to 1.00pm and at the Retford outreach office, 17b The Square, Retford on Tuesdays and Thursdays from 10.00am to 2.00pm.