1 in 8 to face credit card limit cuts

Wednesday, 30 January 2008 12:00

Twelve per cent of UK credit card holders have faced credit limit cuts in the last year, according to new research.

A study by Fool.co.uk reveals reductions to credit limits are far from across the board - with young cardholders more likely to have credit limits increased.

Brits aged 34 to 49 are most likely to face credit limit cuts - with 17 per cent seeing available credit card balances reduced - while those aged 18 to 25 are seeing lenders allowing them to rack up higher bills.

Across the board 14 per cent of people have had credit limits increased - but a third of those under 25 have had limits upped - rising by a fifth on average.

David Kuo, Head of Personal Finance at Fool said: "It seems banks are sending out confusing signals to consumers as the credit crunch unfolds.

"On the one hand, they are slashing credit limits to older consumers who have become accustomed to credit. But on the other hand, they are increasing credit limits for younger consumers at a time when we need to practice greater financial discipline."

He went on to suggest banks were pushing older customers towards secured loans over unsecured credit card debts.

Mr Kuo warned: "There are indications lenders are pulling down the shutters for some customers, and holding the door open wide for others.

"But consumers must avoid getting their fingers trapped in the credit crunch because what banks give with one hand they can easily take away with the other."

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