Author Lauren Howells

Credit card companies are “pushing credit” on people who can’t pay, says Citizens Advice, as new research reveals that only 1 in 4 credit card holders, who had their credit limit increased in the last 12 months, actually asked for it.

According to the national charity, out of the 8.4 million people who received a credit limit increase in the last 12 months, which works out as 28% of credit card holders, 6 million did not consent to the rise and 32% of those who showed “signs of struggling financially” were given a rise.

Limits increased by £1,481 on average without card holders being asked

The research, an online survey of 2,033 UK adults undertaken by Citizens Advice and ComRes, revealed that credit card holders’ limits were, on average, increased by £1,481 without them being asked and 1 in 10 people received increases of £3,000 or more.

Credit card companies “putting individuals and the wider economy at risk”

Citizens Advice says that 85% of people think that credit card companies should “always ask permission before increasing someone’s limit” and accuses credit card companies of “ putting individuals and the wider economy at risk if people are unable to pay down their debts”.

People who weren’t confident they could pay back current debts more likely to have been given extra credit

Six million people had their credit limit increased without consent

The charity goes on to say that it thinks that those who weren’t confident that they could pay back their current debts were actually more likely to have had their credit limit increased, with 32% of people who weren’t confident they could pay back their debts given a rise, compared to only 23% who were confident that they could pay their debts back.

To illustrate the point, Citizens Advice talked of one woman, who is now unable to work and reliant on Employment and Support Allowance, who had built up £3,500 of credit card debt that she was unable to pay back, after her credit limit of £500 was extended “multiple times”. The charity says that she is now “considering a Debt Relief Order”.

Chancellor urged to “protect consumers” by banning unsolicited increases

It urged the Chancellor to use his Budget statement on Wednesday to announce that he will “protect consumers by banning unsolicited increases altogether”.

Chief Executive of Citizens Advice, Gillian Guy, said:

“It’s clear that credit card companies are contributing to the rise in consumer debt.

“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.

“Few consumers support unsolicited increases and our research shows that they make people’s debt problems worse. The Chancellor must step in to prevent credit card companies weighing people down with unwanted debt – particularly when they are already struggling to keep their heads above water.”