Iona Bain
Banks and other financial firms are dragging thousands of people further into debt by quietly raising credit card limits without their knowledge, a leading charity has revealed.
StepChange Debt Charity estimates that 100,000 clients have seen their credit card limit increased without asking for it in 2015 and, as a result, 50,000 saw their debt problems get worse.
It’s calling on the Financial Conduct Authority, Britain’s financial watchdog, to ban the practice, arguing that credit limit increases must be something that people opt-in to. At present, credit card firms can raise the credit ceiling so long as they give customers a 30 day window in which to opt out.
The current system means that thousands of vulnerable consumers, including young people, are currently sleepwalking into higher credit balances that they cannot sustain, prolonging existing debt problems and sparking a crisis if their income drops. The problem is partly due to low minimum repayments, which lull customers into what the charity calls a “false sense of security”.
