Credit card providers increase credit limits without consent

As the Governments' spotlight shines on the UK's credit card market in a new white paper, research from uSwitch.com reveals that 5.7 million consumers have seen their credit limit increased by an average of £1,538 in the past 12 months without their consent. In total, these consumers have received an additional £8.8 billion of credit. If these consumers max out their new credit limit, they could now face an annual interest bill of £1040 each or £5.9 billion in total. 3% of people received an even bigger shock when their credit limit was slashed without their permission.

In total, 31% of all credit card customers have seen their credit card limit move in one direction or another over the past 12 months, 90% of these have been increased by a staggering £13 billion. With the average credit card limit at £5,129, this now gives them a total of £6,667 to spend. In total, almost 4 million consumers (13%) actually approached their provider to request an increase to their credit limit and just under a third of these (4%) were rejected.

Louise Bond, personal finance expert at uSwitch.com, comments: "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. However, the issue is far more complicated as providers are taking away consumer choice by throwing extra credit at people without their consent. There is also a question mark around how these people are selected for an increase or decrease to their limit and if this in itself is in the customer's best interest.

"Unless you are one of the 68% of consumers that regularly pay their credit card bill in full, keeping high levels of debt on interest bearing credit cards isn't advisable as it's an expensive form of borrowing. In most cases, providers really aren't helping consumers by throwing cash at them as it could be placing unnecessary temptation in their path."

Credit cards are still an expensive way to borrow money if they aren't used correctly. Fees and charges on these cards are constantly climbing with purchases APRs jumping up by 0.74% in the last year alone from 16.95% to 17.69%. For larger debts that cannot be paid off over a shorter period of time an unsecured personal loan really is a cheaper option with average APRs currently at 9.07% - 8.62% lower than the average credit card rate.