Did you know you are more likely to have your credit-card limits cut if you are older, but hiked if you are young?
No? Well it's true.
1 in 8 of us in the UK who own a credit card, have had our credit limits cut say the wise folk at independent finance website Fool.co.uk.
- Overall, our credit card spending limits have been pruned back by about 7%; while 1% of us have even had our cards cancelled.
- It appears that those of us aged 34-49 are the worst affected with 17% in this age group saying their credit limits have been reduced.
- Elsewhere, 14% of those in their early fifties have seen their spending limits cut.
But as always, there are two sides to every story and credit cards are no different.
The flipside is even more disturbing if you think that banks are behaving prudently (does such a thing even exist we ask?)
That's because if you are a young person aged 18-25, you are three times more likely to have your credit-card limit increased!
- Nearly 1 in 7 has been given additional facilities by their credit card providers in recent months.
- However 50% (or three times as many cardholders), who are between 18 and 25 years of age have seen their spending limits upped.
- In the main, 18 to 25 year-olds say their credit limits have been increased by 20%, while 41% of young Brits reckon their credit card providers have boosted their spending powers by up to 50%.
Depending on your viewpoint (
and your self discipline), this may or may not be a good thing!
David Kuo, Head of Personal Finance at Fool.co.uk, said:
"It seems that banks are sending out confusing signals to consumers as the credit crunch unfolds."On the one hand, they are slashing credit limits to older consumers who have become accustomed to credit. But on the other hand, they are increasing credit limits for younger consumers at a time when we need to practice greater financial discipline.
"As part of Fool.co.uk's report into Your Finances in 2012, we predicted that secured lending will grow at the expense of unsecured borrowings. And it seems that by reducing available unsecured credit for older customers, banks are leading these customers towards secured loans.
"There are indications that lenders are pulling down the shutters for some customers, and holding the door open wide for others. But consumers must avoid getting their fingers trapped in the credit crunch because what banks give with one hand they can easily take away with the other."
So, while some of the younger among us may be delighted that their credit card now gives them bigger spending power, the older ones among us may be worried that we can't manage if our credit limits are slashed.
Either way, it requires a lot of self discipline and prudent spending to make sure you are able to get the best out of your credit card.
And if you don't think you are getting the best out of your credit card, why don't you switch?
Alternatively, if you want a more effective credit card that is better for you, it's worth looking at these offers:
- Halifax One Card (0% for 12 months on purchases and 0% for 12 months on Balance Transfers made in the first 90 days)
Claim back your credit card and mortgage exit fees7 reasons why you should use your credit card for everything
Source: © www.fool.co.uk