Credit Crunch Results In Limit Cuts
8th April 2008
The credit crunch which started in America, has lead to almost 1.8 million UK credit card customers having their credit card limits cut by on average £1,600 over the past six months according to a new survey. It is estimated that in total some £3 billion of credit has been removed from customers spending limits, as credit card companies show a greater reluctance to lend as a result of the on-going credit crunch.
The Co-operative Bank, Halifax, HSBC, Capital One and MBNA are reported to be among the credit card companies which have reduced credit limits for some customers. A Halifax spokesman said the bank has always "maintained" credit card lending limits and said there had been no change in policy, adding that the bank tended to revise limits up as well as down.
Younger credit card customers are most at risk of having their credit limit reduced, with some 6% of 25-34 year olds saying that their credit card limit had been reduced.
Consumer credit counseling organisations have welcomed the cuts saying that credit limits often encourage people to borrow right up to that credit limit and that lowering credit limits for some borrowers could only be a positive move.
