Barclaycard has defended reducing credit limits for some customers after backlash from people complaining that they have been cut by more than 95%.
Some customers have complained that their limits have been drastically reduced even though they have never defaulted on payment.
It was pointed out that Barclaycard made the cuts at a time when some people might need financial support.
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Barclaycard said more customers had received credit limit cuts in the past year amid the impact of the coronavirus pandemic, but added that they represented only a very small number of its global clientele.
He said that as a responsible lender he has to make sure people don’t borrow more than they can afford.
âLike many other lenders, our credit risk models take into account changes in the UK economy, as these can impact our clients’ ability to effectively manage their borrowing,â a door said. – speech by Barclaycard.
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âOver the past year, we have had to take into account the continued economic impact of the coronavirus, which has resulted in an increase in the number of customers receiving credit limit reductions,â she continued.
âHaving up-to-date credit risk models is part of our commitment to be a responsible lender, to ensure that clients don’t borrow more than they can afford.â
âFor some customers, for whom we don’t think their current limit is affordable, we provide information on how to appeal the limit change by verifying their income,â the spokesperson said.
“When we lower a customer’s credit limit, we will not lower it below their current balance and we will ensure that they have at least enough leeway in their account to continue with their essential spending. . “
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Outrage on social media
A customer complained yesterday on Twitter: âWhy, for no apparent reason, have you reduced my credit limit by 96%? I have never missed a payment and I pay more than the minimum payment. “
Another Twitter user wrote: ‘Having had an @Barclaycard for several years that I paid off every month without fail they have now contacted me to tell me they are lowering my credit limit from Â£ 1,800 to 250 Â£. Why? This is your loss because I have 3 other credit cards that I will now use instead! “
Justin Basini, managing director and co-founder of credit scoring service ClearScore, said: âAverage credit limits at the end of December 2020 were almost half of what they were at the start of the year. ‘year.
âAs government support programs to protect consumer finances and access to credit come to an end, we are seeing some lenders, including Barclaycard, trying to deal with the financial uncertainty caused by the end of these support programs. of Covid-19 by drastically reducing credit limits. .
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âThis is in line with what we saw last year, as lenders sought to minimize their risk, as the number of credit products available to consumers declined significantly by 77% between January and July, at the height of the first lock.
âHowever, sudden reductions in credit limits can have a negative impact on credit scores, as higher limits show a lender’s confidence in a person’s ability to repay the money that has been loaned to them. .
Virgin Money last year
In May of last year, Virgin Money reversed its decision to block some customers from making new purchases on their cards, saying it had listened to the comments and decided it was not the right time to make the changes.
It had previously emerged that some Virgin Money customers had received emails stating that other spending on their credit cards had been blocked following a review of their accounts.
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