Credit card companies reduce spending for older customers and increase limits for younger ones
March 14, 2008
According to a recent report many credit card companies have been reducing the spending limits on cards for older customers that have become used to credit but have been increasing spending limits for younger customers who may still be getting to grips with responsible spending on and repayment of credit cards.
Recent research shows that around 12% of cardholder in the UK have seen their credit limits reduced with a further 7% having had their credit cards cancelled altogether.
The customers that have been hardest hit by reduced spending limits are those aged between 34 and 49 years, with around 17% of cardholder in this age group claiming to have had their credit limits cut.
Around 14% of cardholders in their 20s have also seen their credit limits reduced by credit card providers.
However, around 14% of younger cardholders aged between 18-25 have been given additional facilities by credit card companies, and around 41% of cardholders in this age group claim that their spending limit has been increased by 50%.
One official from Fool.co.uk stated: “It seems that 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 added: “As part of Fool.co.uk’s report into Your Finances in 2012, we predicted that secured lending will grow at the expense of unsecured borrowings. And it seems that by reducing available unsecured credit for older customers, banks are leading these customers towards secured loans. There are indications that 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.”
