One in five people with debt problems have had their credit card limit increased without requesting it, new research from Citizens Advice has found – a higher proportion than for cardholders overall.
According to a nationally representative opinion poll commissioned by the charity in June this year, some 18% of struggling credit card users had their limit raised in the past year without requesting it, compared with 12% of all credit card-holders.
The survey defined struggling credit card users as those who felt their debts were a burden and had not felt able to afford household bills or debt repayments for more than a year.
If you've had your limit increased without requesting it, here's what you can do about it.
What are the rules?
The Financial Conduct Authority (FCA) allows credit card providers to increase your limit without your express permission, but says they shouldn't if you've previously told them not to, or are at "risk of financial difficulties". The FCA does not have a specific definition for this but expects firms to be able to identify those at risk.
Your provider must inform you before it makes any change to your credit limit and must give you at least 30 days' notice. It can do this by several methods including email, or a phone call followed up in writing.
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What to do if your credit limit's increased without you asking
If your credit limit has been hiked without you requesting it, you can ask for it to be reduced – but before doing so, it's worth weighing up the pros and cons of a higher limit.
An increase in your credit card limit means you risk falling into more debt if you can't repay what you've spent – so if you're struggling with debt or failing to regularly make repayments, it may cause you more problems.
Yet having a higher limit can also boost your credit score, which in turn affects whether you can get mortgages, credit cards and loans, and also mobile phone contracts, monthly car insurance and more.
Some credit score providers warn that lowering your credit limit can hit your credit score because it increases what's known as your 'credit utilisation ratio' – which is the amount of credit you use compared with your credit limits.
If you have a low credit score and/or you use a large amount of the credit available to you, lowering your limit may decrease the likelihood of banks lending you money in future – so it's worth factoring this in when deciding on a sensible limit.
If you want to say no to an increase you can do so by contacting your bank. If you want to reduce your limit further, check the terms and conditions of your card, but it is likely your provider will reduce it to the rate you request. To see your credit score and find out more about credit utilisation, you can use our free MSE Credit Club.
'Irresponsible behaviour making people's debt situation worse'
Citizens Advice is campaigning for increases in credit limits to be opt-in, not opt-out – so your credit card provider would have to get your permission before raising it.
Its chief executive Gillian Guy said: "It's clear that irresponsible behaviour by some lenders is making people's debt situation worse – such as offering more credit when they already have thousands of pounds of unpaid debt.
"The regulator must ensure that lenders are taking into account people's whole financial and personal situation before agreeing further credit. Banning firms from raising existing customers' credit limits without seeking their express permission first would also help people take more control over their finances."
A spokesperson for UK Finance, which represents credit card firms, said: "Helping customers struggling with persistent credit card debt is a priority for our members... The industry has already developed a number of proposals to address the regulator's concerns and ensure that no customer in persistent debt will be offered a credit limit increase.
"We continue to work closely with the FCA, Citizens Advice and other charities to introduce the next phase of measures that will improve support for customers experiencing financial difficulties."