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U.K. Credit Card Companies Raise Limits of 2 Million Brits Drowning in Debt

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Without first asking for permission, credit card companies in the United Kingdom raised the credit limits of two million people who were already struggling with personal debt. 

Data from Citizens Advice suggests deceitful lenders are making it too easy for at risk individuals to access higher credit limits.

One in Three At-Risk People Received a Credit Limit Boost

The firm suggested that a third of people who were already facing debt struggles were provided with an increase to their credit limits without first being asked.

Citizens Advice is a debt charity. It suggests that unscrupulous practices at certain lending firms have shoved thousands of pounds of additional credit into the hands of millions of at-risk individuals who don’t have the means to pay off that extra debt.

The firm estimates that of the 8.4 million people who received a credit card limit increase last year, about 6 million people did not ask for it. That means that only one in four people who received a credit limit increase on their card requested access to the additional debt load. This made it possible for them to add even more debt onto their credit cards than they already had – debt they were not financially able to pay back. One in ten credit limit increases was of £3,000 or higher.

The Average Credit Limit Increase Was £1,481

Citizens Advice is calling for the Chancellor to ban the practice of adding unsolicited credit limit increases when he makes his Budget statement this week. The goal of the firm’s request is to help to protect vulnerable British consumers.

“It’s clear that credit card companies are contributing to the rise in consumer debt,” said the firm’s chief exec, Gillian Guy. “Rather than credit card holders seeking to take on more debts, lenders are actively pushing it on people without enough consideration as to who can afford to pay and who can’t.”

UK Household Debt to Income Ratio

The Financial Conduct Authority (FCA) watchdog group has also proposed new rules for the credit card market following its own investigation. Among the recommendations for changes to this marketplace include those raising credit limit control.

Note: The opinions expressed in this article are the author's own and do not necessarily reflect the view of Alvexo on the matter.