Barclaycard tries to defend slashing credit card limits of loyal customers

Customers have shared their outrage at Barclaycard after hundreds have had their credit card limits slashed – some by as a lot as 99 per cent. 

Barclaycard is dealing with a customer support firestorm because it tries to defend slashing the limits of loyal credit card customers.

Stories of limits being slashed emerged final week, with these longstanding customers affected who had by no means missed a cost angered by the proposed strikes and saying they have been taking their enterprise elsewhere.

Customers say they’ve been left feeling insulted and are ‘disgusted’ on the manner the corporate has decreased their limits with no clear rationalization. 

Some say that Barclaycard has by no means checked on their monetary standing, which in lots of situations has remained the identical or improved, however slashed limits to unusably low ranges claiming the pandemic might have affected their funds. 

Barclaycard issued an additional assertion lower than 48 hours after the information was first reported by This is Money and sister publication Money Mail on Wednesday.

Barclaycard – half of Barclays – customers have rounded on it after it proposed slashing the spending energy of their credit playing cards by as a lot as 97%

My restrict was lower from £11,000 to £300. I’ve been a buyer for years and by no means missed a cost 

The credit card supplier mentioned an elevated quantity of customers had seen their credit restrict lower due to ‘the continued financial influence of coronavirus’ on the UK. 

‘They clearly don’t desire you as a buyer’: Man has credit restrict slashed from £25,000 to £250 

Mike Williams from Surrey, says he has had his credit restrict slashed by 99 per cent with a discount from £25,000 to £250.

The 62-year-old who has been a buyer for 28 years mentioned: ‘Barclaycard have been the one who’ve arbitrarily elevated the restrict over time.

‘I hardly use it as there are not any rewards or advantages. When I went online to cancel the card, they inform you to ring which I did however 40 minutes later I used to be nonetheless ready so I gave up.’

Mr Williams mentioned if something his earnings has elevated through the pandemic and that he has no debt or loans.

He added: ‘I believe it is the cheek. I used to be insulted after which noticed that it had occurred to everybody else.

‘You sit there considering they clearly don’t desire you as a buyer.’ 

 

But customers who spoke to This is Money mentioned they’d not been negatively affected financially by the pandemic, have been ‘baffled’ by the choices, and had had Barclaycard affirm that it didn’t have particulars of their earnings on file. 

The spherical of latest proposed reductions was the second within the final 12 months, after it lower some debtors’ limits final July.

But the most recent drastic cuts drew a backlash from customers, some of whom have been with Barclaycard for many years, as a result of their spending restrict in some circumstances was lower by as a lot as 97 per cent.

Diarmuid O’Fathaigh, a buyer from Oxford, advised This is Money: ‘My restrict was lower from £11,000 to £300. I’ve been a buyer for years and by no means missed a cost. When I spoke with Barclaycard no one was in a position to clarify why, past the standard ‘accountable lender’ line.

‘I closed the account and took out one other card elsewhere as an alternative.’

Another buyer of the financial institution for greater than twenty years, who had beforehand seen his restrict repeatedly upped to £8,500 with out asking, immediately noticed it slashed to £1,000.

He was additionally advised he can not increase his credit restrict from £1,000 for not less than 4 months as a result of he missed a 31 March deadline to spend some cash after the letter informing him his restrict was being lower was despatched to an outdated handle.

But, he mentioned, ‘the explanations given for slicing my credit restrict to this stage made no sense and seem contradictory.’

Barclaycard has by no means requested me about my funds and admitted it had nothing on file to say how a lot I earn 

He added: ‘I used to be advised it was as a result of of the pandemic and other people’s monetary circumstances – though Barclaycard has by no means requested me about my funds and admitted it had nothing on file to say how a lot I earn.

Customers have hit out on the firm on Twitter after discovering their limits have been slashed

‘Secondly, I used to be advised the lower was so harsh as limits had been lowered relying on how a lot individuals had used playing cards within the final two years.

‘I identified that spending over one of these years was decrease due to individuals being ordered to keep at residence throughout lockdown – and in reality, it might absolutely be a higher concern if individuals have been spending extra, but these individuals would retain the next credit restrict.’

Scott Waterman, 46, from Northamptonshire, was advised his borrowing quantity is being lower from £13,600 to £250.

Speaking to the Mirror, Mr Waterman mentioned he has by no means missed a cost within the 17 years he has been with Barclaycard and that his earnings additionally has not dropped.

He added: ‘I used to be offended and dissatisfied as I preserve that card for emergencies comparable to journey, and healthcare prices when touring.’

Another buyer advised MailOnline her restrict had been lower from £11,800 to £250 regardless of by no means having missed a cost.

The girl, from Croydon and who says she has been a buyer for 41 years, mentioned: ‘I’ve by no means missed a cost, at all times paid nicely earlier than the due date and at all times far more than the minimal cost.

‘I used to be advised on the cellphone my account was classed as dormant. However, I had cleared off the excellent stability in full two weeks earlier than the due cost date and their letter lowering my credit restrict adopted just a few days later.

‘A restrict of £250 is not any good to me for reserving a vacation or flights, so, I advised them to “shove their credit card and shut my account “.

‘I really feel it’s a disgusting manner to deal with a loyal and good buyer and I’m glad I don’t have a checking account with them.’

Barclaycard confirmed some customers could be unable to enchantment the lower to their credit restrict as a result of the decreased stage was greater than their highest stability at any level over the past two years.

Some Barclaycard customers advised they might enchantment resolution by sending in proof of earnings

However, others, like 42-year-old Louise Porter from Hampshire, have been advised they might have the change reviewed in the event that they despatched in both a financial institution assertion or payslip as proof of earnings.

Louise, from Hampshire, advised This is Money her restrict could be lower from £11,900 to £1,650 subsequent month, regardless of her having by no means missed a cost in 20 years.

She mentioned she felt its affordability arguments have been ‘a smokescreen for removing non-profitable customers’, one thing it repeatedly denied.

Instead, Barclaycard, one of Britain’s largest credit card issuers, pointed to the financial influence of the coronavirus. Last yr banks reduce their lending affords amid issues about handing out credit to these doubtlessly unable to pay it again.

One Barclaycard buyer was advised at the beginning of final month his credit restrict was being lowered from £8,500 to £1,000 after the financial institution had repeatedly raised it with out asking him

Its guardian financial institution Barclays mentioned its UK credit card division’s earnings fell 24 per cent to £1.514billion ‘as decreased borrowing and spend ranges by customers resulted in a decrease stage of curiosity incomes lending balances.’

Ironically, survey findings printed on Thursday by the Bank of England estimated the provision of unsecured credit like playing cards and private loans would improve between April and May.

Demand was additionally anticipated to improve after falling within the first three months of 2021.

Barclaycard was one of a number of banks which have elevated the generosity of their 0 per cent credit card phrases in latest months as lenders seemingly turn out to be extra optimistic concerning the UK’s financial restoration from the coronavirus pandemic.

But the choice leaves debtors who will now have much less spending energy than they’d earlier than with a two-pronged headache. 

Their credit restrict being decreased means any stability will now attain the next proportion of that new restrict, doubtlessly damaging their credit rating. 

Justin Basini, chief government of the credit-checking agency ClearScore, mentioned: ‘It is mostly seen as a great factor if an individual solely makes use of a small proportion of their total credit restrict because it exhibits that they don’t seem to be overly reliant on credit and are not probably to max out on their playing cards. 

‘By lowering the full credit restrict, this proportion might improve, which can have a unfavorable influence on an individual’s credit rating.’

Meanwhile, having a restrict lower by as a lot as 97 per cent hinders the power to make huge one-off purchases on a card, comparable to holidays because the economic system opens up.

The buyer whose restrict was decreased from £8,500 to £1,000, a discount of 88 per cent, mentioned: ‘I might have had no drawback with mine being lowered barely, however a £1,000 restrict is pretty ineffective even when for simply reserving flights for a household of 4.’

Some of the cuts sound excessive. How many individuals desire a restrict beneath the price of a cheapish TV? You cannot unfold the price of a vacation over a yr if the restrict will not pay for the vacation within the first place.

Sara Williams, debt adviser 

Sara Williams, a debt adviser who runs the weblog Debt Camel, advised This is Money: ‘Some of the cuts sound excessive. How many individuals desire a restrict beneath the price of a cheapish TV?

‘You cannot unfold the price of a vacation over a yr if the restrict will not pay for the vacation within the first place.’

A Barclaycard spokesperson mentioned: ‘As with many different lenders, our credit threat fashions have in mind adjustments within the UK economic system, as these might influence our customers’ means to handle their borrowing successfully.

‘Over the previous yr, we’ve got had to have in mind the continued financial influence of coronavirus, and this has resulted in a rise within the quantity of customers receiving credit restrict decreases.

‘Having up-to-date credit threat fashions is an element of our dedication to being a accountable lender, to assist make sure that customers will not be borrowing greater than they will comfortably afford.

‘For some customers, the place we do not imagine that their present restrict is reasonably priced, we offer information on how to enchantment the restrict change by verifying their earnings. 

‘When we scale back a buyer’s credit restrict, we won’t scale back it to beneath their present stability, and we’ll make sure that they not less than have adequate headroom on their account to proceed important spending.’

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