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23/04/2021

Barclaycard cut credit limits by up to 95%

Many of Barclaycard’s customers have been hit with a huge credit limit reduction this April, with calls for the cuts to be overturned.

Barclaycard customers have resorted to online forums and social media to share the difficulties that the credit limit reduction will cause; some reporting cuts of 90 – 95%, one with a reduction from £5,000 to £250 with a months’ notice.

With many personal accounts voiced online, it’s clear to see that many customers are unhappy with the new changes brought in.

Why have Barclaycard reduced credit limits?

Barclaycard said that the economic impact of coronavirus had caused them to review the credit limits and make the decision to reduce them, however, they haven’t said how many of their customers have been affected. This falls in accordance with the responsible lending they must be seen to offer by the Financial Conduct Authority.

Will Barclaycard cutting my credit limit affect my credit score?

Potentially. Your credit utilisation rate plays a part in your credit score. This is basically the amount of your credit limit you’re using, as a percentage. Most money advisors recommend you keep this below 25%.

Let’s say you have a credit limit of £3,000 and owe £250, your credit utilisation is 8.33%. If your credit limit is cut to £500 and you still owe £250, your credit utilisation will be 50%, which is where the impact to your credit file comes from.

There are reports online that Barclaycard have reduced credit limits below some of their customers outstanding balances, but they’ve defended themselves by saying that this isn’t the case. They’re suggesting that where credit limits are reduced, it will still be higher than the outstanding balance, with headroom for essential spending.

The reports online of this happening seem to have come from Barclaycard calculating the maximum credit limit, but clients have then spent, taking the balance higher than the credit limit was set to. Barclaycard have confirmed that this will be reassessed before the reduction takes place.

Objecting to the credit limit decrease

If you feel Barclaycard reducing your credit limit is unjust, you may have noticed from their letter that they’re offering the option to challenge them about the reduction. You’ll need to send some evidence, such as proof of your income, bank statements etc.

Struggling with repayments

If the latest changes from Barclaycard have caused you to re-evaluate your financial situation or made you realise that you need some help and advice with your debts, you can speak to our experienced advisors in complete confidence on 01925 599400 or use our Online Debt Advice Tool without needing to speak to anyone.

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