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In a disturbing trend out of the United Kingdom, credit card customers in the UK with a spotlessly clean credit histories are being targeted and seeing their limits cut to £100 of their existing balance thereby curbing their spending limits by thousands of pounds.

Credit card firms have already been trimming customers’ borrowings. A secret industry-wide cull has taken place and the reason why banks did not inform customers of their decision is because they feared that they would go on a spending spree in order to keep a higher rate.

Customers up and down the country have been left red-faced and humiliated when, attempting to make a transaction, their cards have been declined. When interviewed they all say they have excellent credit ratings, settle their debts every month and incur none of the bank charges which make money for card lenders.

Last month, internet bank Egg in the UK, part of Citigroup, withdrew the credit cards belonging to 161,000 customers who had spotless credit files. The move provides additional evidence that customers who do not generate revenue for credit card companies are having their credit cards withdrawn.

The move has angered many people with one individual saying he was ‘furious’ after being left red faced when trying to purchase a rail ticket. Another was ‘embarrassed and humiliated’ when his card was rejected. Another individual said they had the spending limit on their Sainsbury’s credit card reduced from £4,950 to £700 without warning in spite of having a credit rating of 999 out of 1000 in the UK.

Sainsbury’s insist that they always abide by the industry’s rules on treating customers fairly and was cutting customers rates as part of a” limit reduction initiative”.

A spokesman for Barclaycard said that the lower limits only affected customers who were ‘overstretched’. They did not give prior warning because ‘then they could go out and spend up their balance.’

In spite of a cardholder with an excellent credit score having his card rejected the Co-Operative Bank have denied that it was reducing credit limits across its customer base.

Goldfish - part of US-owned Discover Financial Services have refused to comment on the reasons why they have cut credit limits particularly on those customers who have an excellent payment history and always settle their balance at the end of the month.

A spokesman speaking on behalf of The Association of Payment Clearing Services (Apacs), which represents lenders and credit card companies, said there was no concerted effort among credit card companies to reduce limits uniformly to within £100 above customers’ existing limits.

She said: ‘Providers will be making these cuts mainly for one reason – to reduce their credit risk.’

If these procedures are adopted in the United States there would be a serious impact to the credit scores of consumers as it would suddenly appear as if their credit lines were maxed out with the limit reductions.

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Steve

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