Credit card limit increases ‘pushing thousands more into debt’

Increasing credit cardholders' spending limit without asking their permission leads to more debt problems, charity claims.

Lenders that automatically increase credit limits are thrusting thousands of people deeper into debt.

That’s according to the StepChange debt charity, which is calling for the practice to be banned.

It cited a survey of 1,800 of its own clients, which found that more than half (54%) of those with credit cards had seen their limit increased without them asking for it.

Of those, 49% said it had made their debt problems worse.

Worryingly, around one in 10 (11%) cardholders claimed they asked their lenders for help with financial difficulty and subsequently saw their credit limit increased.

The “devastating consequences” of increasing credit limits

Mike O’Connor, chief executive of StepChange, said lenders should focus more on helping those with debt problems rather than simply increasing their borrowing capacity.

“For people who are already struggling, an unrequested credit limit increase or being offered credit as a remedy can push them further into debt, with devastating consequences for them and their families,” he said.

“Rather than increasing credit limits, lenders need to identify people who are struggling early and offer effective, financial assistance.”

The debt charity is calling on the regulator to make credit limit increases an ‘opt in’ process so that borrowers “are not presented with credit that they did not ask for and did not objectively decide they could afford”.

What to do if you have debt problems

If you have money worries, it’s important you take action, so read our guide on where to get debt advice. You can also read about how to pay off your credit cards debts and, if it's relevant, what to do if you’re retired and still in debt.