Unrequested credit limit increases could see rise in IVA needs
- Thursday, 2 July 2009In the past 12 months credit card providers have increased customers' limits by a total of £8.8 billion, heightening the risk of financial difficulty among consumers and the potential need for IVAs and other debt solutions.
Research from uSwitch found that the huge increase in credit was unrequested by consumers. The credit card companies took it upon themselves to give their customers larger overdrafts.
The average credit increase was £1,538, from £5,129 to £6,667. Subsequently, interest bills rose from £800 to £1,040.
It is this rise in interest that could cause problems for the consumer in the future and see a potential increase in the need for countermeasures such as debt advice and
individual voluntary agreements (IVAs).
Louise Bond, personal finance expert at uSwitch, said: " "In the current climate you could be fooled into thinking that increasing credit limits without permission is a good thing as it stops people going over their limits and incurring extra charges.
"Providers really aren't helping consumers by throwing cash at them as it could be placing unnecessary temptation in their path."
The £8.8 billion of extra credit forced on consumers could net the banks £5.9 billion in interest payments.
