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Attack on credit limits

Credit Cards, borrowing on Loans and discussions on Stoozing
Alaric
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Attack on credit limits

#92170

Postby Alaric » October 31st, 2017, 10:40 pm

I cannot say I am completely surprised, but I've had three recent notifications from NatWest that they would like to reverse a lifetime of encouraging borrowing by cutting credit limits on my credit cards and reducing my notional overdraft limit. All three I would regard as rainy day facilities, so are currently little used.

I'm aware that the FCA pointed out to banks that credit and overdraft facilities, even if unused, were a potential risk and therefore needed capital to be held against them.

BBLSP1
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Re: Attack on credit limits

#92199

Postby BBLSP1 » November 1st, 2017, 5:16 am

So it's not only me then - same here.

I have banked with NatWest for decades and they have recently dropped my overdraft limit, which I never use anyway.

Same with NatWest credit card, my limit was 6x my maximum monthly usage this last year, now dropped to 5x. (I fully pay off by DD every month.)

I can understand the rationale.

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Re: Attack on credit limits

#92214

Postby Raptor » November 1st, 2017, 8:14 am

NatWest keep trying to increase my limit, it is already £7500. They have reduce my overdraft limit, but it was done when I changed to their "reward" account.
Not bad for a semi-retired...............

Raptor.

BTW I used to have a £10K limit plus whatever was in my current account on the "old" private account. Brought a £16K car on card to get "airmiles".

Alaric
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Re: Attack on credit limits

#92236

Postby Alaric » November 1st, 2017, 9:35 am

Raptor wrote: Brought a £16K car on card to get "airmiles".


The curtailment of card reward schemes in recent years makes the loss of potential credit for big ticket items perhaps less of a problem. But if the seller is having to pay a commission for your use of a card, it might be in their interest to give a discount for cash settlement. If you have the funds and intend to settle the card balance immediately, you are losing out on some interest by settling earlier.

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Re: Attack on credit limits

#92237

Postby swill453 » November 1st, 2017, 9:44 am

Back in the good old days of stoozing, higher limits were more common. I had at least 2 with £25K limits (MBNA and First Direct I think) and was stoozing over £90K at one point.

Scott.

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Re: Attack on credit limits

#92808

Postby Satsuma » November 3rd, 2017, 8:20 am

Amex (a reward card) offered me an increase last year, when I have never used much beyond half in all the time I've had it.

Nationwide did similar recently; and Halifax Clarity also, which was the weirdest as its my overseas card so even more rarely used.

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Re: Attack on credit limits

#92843

Postby pochisoldi » November 3rd, 2017, 10:56 am

BBLSP1 wrote:I have banked with NatWest for decades and they have recently dropped my overdraft limit, which I never use anyway.


"Me too" - overdraft limit halved + couldn't care less.

The account is so old it's never appeared on any credit report. Last year's turnover was sub-£100, and the average balance was tending towards zero.
The overdraft limit remained unchanged since the late '90s, despite the account obviously failing to meet the criteria of a "main bank account" some time round 2003.

The account is retained because it represents the longest relationship I've had with any bank, and in the past it's made it easier to access whatever freebies, offers etc, as "an existing customer".

The best period was where I transferred the £100 interest free overdraft into a NatWest eSavings account, and Natwest paid me interest on their own money. I then left the debit card in a locked drawer in the office (60 miles from home, 5 minute walk from the nearest NW), to use in case I left my wallet at home (online transfer, walk to bank, no problem.).

PochiSoldi

Lootman
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Re: Attack on credit limits

#92861

Postby Lootman » November 3rd, 2017, 11:53 am

NatWest told me specifically that it was my low utilisation rate that led to the decision to lower my credit limit from 8K to 6K. They stated that the highest balance I had run up in the previous year was about 800.

It's not my primary card so maybe it's fair enough. But since low utilisation is a key component of your credit score, the enforced higher ulilisation figures might ding your score.

Funny thing is they had raised my limit from 6K to 8K only a couple of years ago.

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Re: Attack on credit limits

#92931

Postby ten0rman » November 3rd, 2017, 4:02 pm

I have two credit cards, neither of which are used overmuch nowadays except when we go on holiday. Both were used fairly heavily in the distant past, but now that the children have left home, the mortgage paid off, no other debts other than day-to-day living, their actual usage has dropped quite a lot.
Both card suppliers have reduced limits in the past, probably as the usage dropped, but recently, one of them, and possibly the other as well but can't remember, have offered an increase. I have not taken it (them) up as frankly I could not see any reason for it. I think, for us, the problem now is that our current account is more than sufficient for our normal day-to-day expenses, so the idea of using the credit cards and hence having to remember to keep track of them just does not occur, and in any case makes life simpler.

I do have thoughts on the desirability of using credit cards. Having owed quite a lot and then gradually paid it off, I now have no desire to take on more long term (define long term for someone in the mid-70's) debt, and in fact tend towards thinking that debt of this nature is a "bad" thing so perhaps I am somewhat supportive of attempts by the banks to reduce peoples debt limits and thus to perhaps force people to live within their means. Yet, I am aware that people "stoozing" can make money at it. I suppose in a way I'm surprised that the banks appear unable to stop it - surely they must be aware of what's going on. One thing I do know, is that ever since the mid-80's when I managed to get clear of debt other than the mortgage, I've been much happier and have resisted further debt, and always paid off the credit cards immediately. Of course, that means that I'm a "bad" person from the view of the banks.

Hmmm, bit of a ramble the above. Sorry.

ten0rman

Alaric
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Re: Attack on credit limits

#92962

Postby Alaric » November 3rd, 2017, 5:37 pm

ten0rman wrote:I do have thoughts on the desirability of using credit cards.


For me, I like the monthly statement of what I've spent and where I've spent it. It's always paid off in full, but if I used a debit card there is always the worry about whether there's enough "float" in the current account as going overdrawn that way can be expensive. With two or three weeks between the statement and settlement date, that's enough time to move money around, if needed, to meet the bill.

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Re: Attack on credit limits

#92969

Postby Lootman » November 3rd, 2017, 6:16 pm

ten0rman wrote: the problem now is that our current account is more than sufficient for our normal day-to-day expenses, so the idea of using the credit cards and hence having to remember to keep track of them just does not occur, and in any case makes life simpler.

I like the idea that all that credit is there, even if I never use it. And if I suddenly decide to take an expensive trip then it's handy to have a card that can handle it.

It's also easier to quibble about charges on a credit card than paying any other way.

So for instance a few weeks ago I took my kids to Japan, which was a seriously expensive trip. But my Amex with a 25K limit covered everything, and I merely had to review the bill when I got back in the comfort of my home before paying a penny.

So NWB lowering my limit means I will use it less, because it is less useful to me now.

ten0rman
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Re: Attack on credit limits

#92984

Postby ten0rman » November 3rd, 2017, 9:37 pm

Alaric,
It may be that I don't run my debit account the same as anyone else, but I do keep an accurate check on it. For each month I know exactly how much I have to spend and certainly over say the last 10 years or so we've never gone over that amount. In fact, I'll go further and say that only once in probably the last 20+ years have we incurred overdraft charges - and that was actually by accident. As it is now, over the last 10 years the amount in that account has gradually crept up such that we are extremely unlikely now to need the overdraft facility.

As you might expect, the debit account also gives on a monthly basis an exact statement of what we've spent, and where.

In fact, when it comes to credit card usage, each month I put money aside to pay that bill, having determined how much I owe, if anything. No need to move money around at all.

Lootman,
Fairly obviously, you have much more money than we have. I think the highest I had was £20K but that was quite a few years ago. These days it's in the low k's, and that's more than enough for our lifestyle.

When all said and done, I am in my mid-70's, and, I suppose, winding down - in a manner of speaking. And trying to reduce death taxes as much as possible without creating problems for my children who'll have to sort everything out when I fall off my perch. I've absolutely no desire to travel - other than to Norway where my sister lives, indeed, I won't even go to see my brother in West Yorkshire because the last time I went I found the roads & traffic so atrocious I couldn't wait to get back home where it's much more rural and hence quiet. In fact, my idea of a good holiday is to hitch up the caravan and go up to a site we know near Oban and sit there for 2 weeks gazing at the sea.

Another consideration for me is that I object on principle to paying excess charges for a credit card so the fact that we are now secure in debit card terms means I don't have to bother about those charges.

In general, I think it's fair to say that I've reached that stage in life when we are reasonably secure financially, I don't want any hassle, because of my health I certainly don't want to fly anywhere and I'm not prepared to put up with the inconvenience of two or three hour waits for boarding, I don't want any debt: in short I want an easy life where I can occasionally pop off with the caravan, and when I'm at home I can play with my lathe/milling machine/computer as I think fit.

But I do know that my lifestyle won't do for everyone.

Cheers,

ten0rman

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Re: Attack on credit limits

#93008

Postby UncleEbenezer » November 4th, 2017, 10:21 am

Nationwide keep trying to increase my limit. Though a little lower than many in this thread, it's already close to 20 times my average monthly spend, or 4 times my spend in peak months when there have been hotel and other travel bills.

Funny thing is, it's also more than they'd lend me on a mortgage, with no reliable income!

poundcoin
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Re: Attack on credit limits

#93195

Postby poundcoin » November 4th, 2017, 11:29 pm

Lootman wrote:NatWest told me specifically that it was my low utilisation rate that led to the decision to lower my credit limit .....


Pleased to have read these comments as I had the same letter from NW this week .
Was worried at first as I thought I had done something wrong , even though I have always paid more than the minimum amount each month .
As others have said it's a comfort knowing in a real emergency you could use your card but hope I never get anywhere near to even the new lower limit .

stevensfo
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Re: Attack on credit limits

#104196

Postby stevensfo » December 14th, 2017, 5:03 pm

For me, I like the monthly statement of what I've spent and where I've spent it. It's always paid off in full, but if I used a debit card there is always the worry about whether there's enough "float" in the current account as going overdrawn that way can be expensive.


Actually, that's one reason why I prefer to pay in cash. My online statement is a lot easier to read, I can control my expenses and it's a bit easier to know how much I should have left in the account.

Steve


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