Barclaycard cuts customer spending limits by more than 85%

Barclaycard has slashed credit limits by thousands of pounds, leaving some customers who have been with it for decades with far less spending power than they once did.

Credit card limits are designed for individuals. Those with higher incomes and good repayment histories are usually able to borrow more; But limits can be cut if your circumstances change or you default.

However, Barclaycard reduces the amount customers can borrow even when they never miss a payment.

This is the second time in the past 12 months that credit limits have been cut by Barclaycard, after the bank did so last July.

Matthew Gooch, 42, has had a Barclaycard for 24 years and previously could borrow up to £9,000. But last month the provider wrote to say it would lower its limit to £2,050.

The university worker’s income increased last year and he spent less on his card than in previous years.

Barclaycard employees were unable to explain why the company would lower the limit; But after he phoned to complain his limit was reduced to £4,500 instead.

“I’m totally frustrated,” says Matthew, from Norwich.

The move is also strange given that Barclaycard has been offering longer interest-free balance transfer terms to customers for the past few months.

Many other Barclaycard customers have complained on social media about the cuts.

Louise Porter, who spoke to This is Money, shared a message published on Friday saying the maximum limit had been reduced from £11,900 to £1,650, a drop of more than 86 per cent.

Louise, 42, from Hampshire, said she had never missed a payment in 20 years and paid off the balance whenever she used it.

“Sometimes I need to use it up for a big one-time payment and then pay it off over a year or so, and I’m able to do that without going over,” she said. “This is out of the blue and is not based on any evidence of how I managed my account or my finances.”

The message sent to her told her the discount, which will take place on May 20, was to make sure her card was “on hand”.

She added that if she sent an updated income statement, whether it was a bank statement or payment receipt, she could review the change.

“It’s annoying that I’ve been planning on making two big purchases later this year and that’s kind of a wrench in the works,” said Louise, who was unable to reach anyone at Barclaycard.

It’s annoying having to provide evidence and not knowing what criteria they use or what they will decide in the end. I think the affordability argument they use is a smokescreen to get rid of nonprofit clients.

The average credit limit in the UK fell 49 per cent from January to December last year, according to data from credit check company ClearScore.

“With the end of support packages like pay holidays and the vacation scheme, some credit card providers have lowered credit limits even further as a way to protect themselves from people who might not be able to,” says Justin Pasini, CEO of ClearScore. To pay back the money I lent them.

Barclaycard’s income in the UK fell by 24 per cent in 2020 to £1.514 billion, as lower levels of borrowing and spending by customers led to a lower level of interest-earning lending balances.

Figures from the Bank of England and UK Finance reveal how UK credit card balances have fallen by record amounts during the pandemic with consumers unable to spend.

Bjorn Svenson tweeted that the company had “immediately wiped £7,000 from my credit limit for no reason”. When asked by This is Money why his cut was cut, he replied, “I have absolutely no idea.”

‘I am self employed, have a stable income with no drop in salary, never miss a payment, always pay above the minimum, had £4000 credit card used on card, £7500 reserve.

“They have now, without any reason, other than responsible lending, lowered the limit by £7,000.”

He added: “I am glad I am below the new credit limit. I feel sorry for those thousands of pounds over the new limit, who have a month to settle before they are charged.

Barclaycard previously charged £12 if customers exceeded their credit limit, but said it removed that penalty in January 2021.

In contrast, Santander and Virgin Money say they are not lowering any of their borrowing limits for their clients, to support those hit hardest by Covid-19.

Last year, Virgin Money caused a similar backlash when it suspended the credit cards of thousands of customers during the country’s first lockdown, many of whom never missed a payment.

The bank changed its mind less than 48 hours later, after the Financial Conduct Authority rejected the move.

A Barclaycard spokesperson declined to disclose how many customers had their limits reduced, adding: “As a responsible lender, we constantly monitor and adjust our cardholders’ credit limits to ensure they don’t borrow more than they can comfortably afford.”