Millions getting credit card limit increases they did not ask for

Credit card firms slammed for putting millions at risk of falling deeper into debt.

Some 19 million of us have been given a credit card limit increase without asking for it, which is causing many to spend more and fall into debt they can’t manage, according to new research from uSwitch.

On average it found credit card holders received a credit limit increase of over £1,300, but one in ten (12%) surveyed were given more than £2,500 of extra credit by their provider.

Worryingly around 4.5 million people who were subject to the surprise increase said they had spent more as a result, while four in ten (42%) had no plan to deal with the higher repayments from this extra spending.

The findings come at a time when unsecured borrowing is above pre-crisis levels.

In the dark

You are entitled to refuse a credit limit increase within 30 days of being told you are getting one.

However, uSwitch claims two thirds of cardholders are unaware that it’s their responsibility to contact the provider if they wish to reject the increase and opt out of any future limit rises.

But it’s not just a lack of awareness that is causing people to take on the additional credit. One in four (24%) took on the increase as they felt it was too much hassle to contact the provider to stop it.

Disturbingly more than one in ten (13%) weren’t aware their limit had increased and one in four (25%) only discovered the change to their account when they checked their online statement.

The reason behind so many cardholders being in the dark about credit limit increases could be down to how they are informed about them. Around 60% said they were told about the increase by post, yet almost half (45%) said they preferred to be told about changes to their account via email.

Tackle credit card debt with a 0% balance transfer deal

History on repeat

Before the credit crunch it was common to get letters declaring you were ‘pre-approved’ for credit and in some cases getting a card you could use to start spending with straight away. But this led to serious debt problems with people spending beyond their means.

Now history seems to be repeating itself, with what essentially looks like ‘free’ money being handed out to millions that haven’t asked for it.

The Money Charity estimates the average household has £2,324 of credit card debt. So with household debt on the rise providers really shouldn’t be encouraging people to bite off more than they can chew.

uSwitch is calling on the Financial Conduct Authority (FCA) to ban providers from increasing credit limits unless asked to help protect users from falling into a debt trap and put them in greater control of their borrowing.

What to do

If you receive a credit limit increase and miss the 30-day window to opt out, you can still contact your provider to get the limit reduced, providing you haven’t started to spend any of it.

For those that don’t mind the change and don't feel the need to call, make sure you only spend what you can afford to pay back and don’t view the extra credit as ‘free’ money.

Tackle credit card debt with a 0% balance transfer deal

Read these next:

The banks and building societies we‘re all switching to

Deadline for Sentinel AI Scheme credit card compensation

Barclaycard launches virtual replacement for lost or stolen credit cards