Most credit card limit increases are uninvited.
Credit card companies are pushing credit on cardholders who can’t pay. That’s the worrying message of research published by Citizens Advice.
The Bank of England and Financial Conduct Authority have been concerned for some time about growth in unsecured debt, particularly on credit cards, as we reported in the summer.
With incomes stagnant and inflation rising more families are finding themselves in financial problems (see box). And as Citizens Advice says, increasing their credit makes it much more likely they will spend the extra money they have access to.
The problem is that three quarters of credit limit increases are offered by card companies without being asked.
The FCA has agreed with companies that they will give customers the option of not being sent unrequested credit increases. But this is a feeble effort to stop irresponsible lending adding to a growing social problem.
Credit card companies should be banned from giving people unsolicited credit increases and putting them at risk of taking on debt they can’t pay back.
* Uninvited credit pushes people further into debt, Citizens Advice/Com Res, November 2017
Citizens Advice provides online help with debt and money problems.