Credit Cards Limits cut to reign in spending

Against the backdrop of the Lloyds TSB/HBOS takeover and the Lehman Brothers controversy, it turns out that even customers with exemplary credit histories are having their spending habits reigned in by credit firms as a precautionary measure.

This has prompted angry reactions from customers who have never defaulted and always managed to successfully juggle their finances, and have found their cards to be rejected when attempting to purchase goods in high street chain stores and even when making purchases as small as train tickets.

Customers who have enjoyed four figure spending limits on their cards in the past have seen their limits shrink into the hundreds. A recent post over on This is Money gives the example of a Mr. Jones from Coventry, who had the ceiling limit on his Sainsbury’s credit card scythed down from nearly £5,000 (£4,950) to a mere £700.

I myself have had similar problems – it’s a few days before payday, and I’ve had to buy my last few train tickets in order to get to work on my Barclays Connect card, an overdraft account left over from my student days, which I use in emergencies.

When I finished uni two years ago, I had a personal debt of around £1,200, which I have managed to shrink down to just over £500 in the space of 18 months thanks to steady monthly repayments, but recently I have found myself unable to make small purchases on my card or make small cash withdrawals. Luckily, I was able to scrape together the correct change in cash out of the recesses of my wallet, but I am all too aware of how it could have gone the other way.

This is a classic example illustrating how what you consider to be a good credit rating will not always guarantee you access to funds in the future, in other words, if the banks have no chance to make any money out of you via repayments and heaping on the interest, then they’re not always going to want to know. Especially in times of financial turbulence like these.

There’s a fine line between having what is a considered a good credit rating from the consumer’s point of view and what lenders consider to be a ‘good’ credit rating.