Credit Card limit slashed without warning

Bunyan said:
So all the banks are carrying out this process of review?
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I think they are reducing the high limits of people who do not use the credit and shuffling it around to people who will use it. ?

I'm Sure I read that somewhere but could be wrong....
 
LOAM said:
TLDR - HSBC are idiots
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I had a credit card with them that only used in emergencies. Mostly stuff for work and the odd tank of diesel, always paid off before the bill came through. Was 300 miles from home, it was 4 days till payday and I needed to fill up the car, been an expensive month working away from home and only had £10 left on my overdraft so used card. Declined, bit strange as should have been nothing on it, called HSBC and they were kind enough to inform me that because I hadnt used it in a while they decided to cancel it.

They were very nice though and were kind enough to extend my overdraft to allow me to pay for my diesel, and then charged me £25 for doing so.....
 
I've had this happen to me before - £10k limit dropped to £3k without warning. They should write to you first and give you 5 days notice imo.

At the time my limit dropped I was booking flights and the £3k limit gave me about £20 free credit, so it left me scratching my head as to why the card was declined. I use my credit card for business expenses and then drop the cash back off the card as work pay me back.

It was Lloyd's TSB that did this to me, I've since moved everything away from them.

Ironically I have another card with MBNA with a £12k limit and zero balance which I don't use at all and MBNA keep increasing the limit. So the card I used regularly the limit gets slashed with no notice and the card I don't use the limit keeps getting stretched. It's pure WTF.
 
Egg card did this to me just 2 months back, £7,000 limit slashed to £1,100 without warning. After complaining and basically being told to go bleep myself, I have decided that I will keep the card, put one small purchase on it every month, pay off the balance immediately, and generally do everything I can to screw with them.
 
Bit out of order to be honest, there is probably some small print saying they reserve the right to change your limit whenever they please but it's still shoddy stuff, hopefully a strongly worded call to them should see it put up to what you would like.
 
Seft said:
This is not uncommon practice within the industry. The theory goes as follows: If you have a 10k line, but only ever spend up to 2k, the most likely reason why you'd end up using the full line is because you've hit some serious financial difficulties. Essentially, you can think of the last 5k as actually fairly high-risk if it's ever used. Whilst this was more theory than practice for many years, I would imagine that some issuers got burned by this phenomenon during the recession and are now being more careful about loose lines. There's also some Basel II influence on the amount of unused exposure they're likely to want.

That said, I don't think they handled the experience very well.
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A reasonable explanation, although if they had put this to my wife at the time I expect she would have launched into a rant about how she wasn't high risk and was paying all her bills.

What you say does make sense however I would have thought that in such case where there is no immediate threat on the 'high risk debt' (no evidence of financial problems) that giving people a 7 day notice period would be reasonable. Surely if we were in that much financial trouble that we'd need to hammer the CC over the next 7 days, we'd already have been building up more of a credit line? That way in the vast majority of cases they could successfully reduce their exposure whilst not alienating customers.

In fact in terms of notice period, because they send out a letter on the day the limit is slashed, effectively it is worse than getting a zero notice period, it's actually a negative notice period while we wait for the letter. No phonecall, no text, no email (although to be fair I don't know if they hold her email address). Because of this even if you ignore the embarrassment / inconvenience factor, my wife is actually out of pocket because she phoned the bank from her mobile (fearing it could have been blocked due to fraud or something). Will the bank be refunding the peak time mobile call? I don't think so.

Somewhat suprised at the reactions in this thread, as I was half-expecting some responses like "LOL n00bs swanning around spending money that isn't yours, if you had read the T&Cs you would have seen this common, I am 100% reliable with my finances and go online every 5mins to check my credit limit in case it changes without warning, HAHAHA IF YOU DIDN'T DO THAT THEN MORE FOOL YOU!!!!11" :)
 
Don't see how that would have been any help in this regard as my understanding is that their records don't get updated in realtime (and even if they did, do they even have the facility to issue an automated realtime alert when a credit limit changes? I doubt it). £10/month would be just another expense eating into the profits we make off the banks, we don't need to know our credit rating, we have more than enough credit, it is just that the limit was slashed on a particular card that we happen to use for joint expenditure. If we knew about it, she could have just used a different card.
 
HangTime said:
Don't see how that would have been any help in this regard as my understanding is that their records don't get updated in realtime (and even if they did, do they even have the facility to issue an automated realtime alert when a credit limit changes? I doubt it). £10/month would be just another expense eating into the profits we make off the banks, we don't need to know our credit rating, we have more than enough credit, it is just that the limit was slashed on a particular card that we happen to use for joint expenditure. If we knew about it, she could have just used a different card.
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It was only a passing comment in response to you mentioning ID fraud.

They do let you know about credit limit changes - not sure it's real time but as soon as Experian know about a change you get a text and an email - same as you get a text & email about any other changes & if they blantantly suspect ID fraud on your record they'll call you.

Not entirely relevant as said - just a passing comment.
 
The thing is my understanding is Experian only get updated by the banks once a month so (on average) you'd expect to get the letter from the bank before then anyway. Good to know, however :)

In terms of Fraud it was just the natural response when your card gets rejected unexpectedly, even if she had an Experian account and hadn't been notified of suspected fraud she would still have needed to phone the bank to work out what the hell was going on.

I will probably write some sort of complaint asking them to review their practices but I shan't expect anything other than a generic response that hasn't bothered to fully read the complaint in return.
 
This has nothing to do with what the OP is talking about though. His lender seems to have slashed his borrowing ability for no apparent reason. Experian etc is no use in this case.
 
Sorry for bumping an old thread but I have an update (in case anyone cares or experienced similar) - my wife received a letter the other day stating that the balance had been reduced in error and was put back to it's original limit of £10600 2 days after it was reduced. Of course, this raises some further questions:

1) Why did the person she spoke to on the phone state that it had happened as a result of a review of past spending and that it was part of their practice to be a responsible lender? Clearly this was BS if it was done in error.
2) Why was she told a letter had been sent out the day the reduction was made, when clearly it wasn't (we never received such a letter so either it got lost in the post or was never sent)
3) Why did we not receive a letter apologising for the error and informing us the previous limit was restored until nearly two weeks after the error was corrected?

Just seems like very poor customer service all round; not only do they fail to notify you of changes, when they make an error and you phone up (at your own expense) to query it, they still don't realise the error has occurred and try to blag it.
 
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