‘Irresponsible’ credit card providers warned over spiralling consumer debt

Published by Adam Williams on 30 August 2017.
Last updated on 30 August 2017

‘Irresponsible’ credit card providers warned over spiralling consumer debt

Credit card providers are acting irresponsibly and pushing those with debts into further financial difficulty, according to Citizens Advice.

Research published by the consumer charity says around one in five (18%) people struggling with credit card debt have had their credit card limit raised without them asking for it. This compares to just 12% of the wider public.

It says the actions of banks and other providers are helping to create a cycle of debt among consumers and believes that banks must conduct more stringent affordability checks on borrowers and be banned from raising consumers’ credit limits without obtaining their consent.

Citizens Advice says it has helped more than 66,000 people with credit card debts in the last year.

In one case a pensioner ended up with 21 credit cards and debts totalling £70,000 after getting into a debt cycle. Another man owed £15,000 on four credit cards but had his limits increased by all four providers without asking.

Just 60% of people struggling with credit card debt are typically able to improve their finances over a two-year period, much lower than people with other kinds of debt.

Data from the Bank of England shows that consumer borrowing is currently above the £200 billion mark, with around a third of this figure on credit cards.

 ‘Irresponsible behaviour by some lenders is making people’s debt situation worse’

Citizens Advice chief executive Gillian Guy believes that reforms are needed to protect consumers struggling with their finances.

“Irresponsible offers of further credit are pushing people into long term debt cycles,” she says.

“Citizens Advice helps thousands of people each year with credit card problems - including those struggling with large debts on several different cards that will take them years to pay off.

 “It’s clear that irresponsible behaviour by some lenders is making people’s debt situation worse - such as offering more credit when they already have thousands of pounds of unpaid debt.

“The regulator must ensure that lenders are taking into account people’s whole financial and personal situation before agreeing further credit. Banning firms from raising existing customers’ credit limits without seeking their express permission first would also help people take more control over their finances.”

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I recently applied for a new

I recently applied for a new credit card with 0% balance transfer/0% purchases as I have a squeaky clean credit record. I was accepted, but only after an unbelievably long and complicated question session lasting about 2 hours! So, if the credit card firms are being this tough on those of us with really good credit records, why are they throwing credit at those who are struggling with it? Could it be sheer greed?