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Tackling your debts

Have you ever been offered more credit without asking for it?

Posted 01 August 2014

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Half of credit card holders have been offered or have received a credit limit increase in the last 12 months.

It can sometimes feel as though there are so many hoops to jump through when you’re trying to secure credit - whether it’s a credit card or a loan … so when a lender offers to increase your credit limit without you even asking it can be truly surprising.

And yet, half of credit card holders say they have been offered a credit limit increase in the last year.

Higher limit

A new survey* conducted for us revealed that nearly half of all respondents with credit cards have been offered a higher credit limit in the past 12 months … despite not asking for it. Of these, two-thirds accepted the increase. Interestingly, 18 to 24-year-olds, who’ve probably only just started to borrow, are the most likely to have this happen. Nearly two thirds of this age group who do have a credit card said they have been offered a higher limit this year, compared to just over a third of over-55-year-olds.

No endorsement

While it can feel incredibly tempting to see an increased credit limit as your borrower giving their blessing to borrow more, it is far from this. Rather than an endorsement of you taking on more credit, your lender is simply demonstrating how much they’re prepared for you to borrow from them.

Just because you’ve been offered a higher credit limit, it does not mean you have to accept it. Card firms must give you the option of refusing the increase. And if you do accept the higher limit it doesn’t mean you have to spend up to it. In fact, you should maintain the behaviour of responsible borrowing that may have got you offered the increased limit in the first place.

Struggling with repayments

If, on the other hand, far from being offered an increased credit limit you’re struggling to make even the minimum repayments on your credit card, it may be a sign that you need to seek expert debt advice.

Only making the minimum repayments on your credit card can extend the time it takes you to repay the balance significantly … and it can also mean you pay a lot more in interest. And if you can’t even make these minimum repayments, you could be in danger of falling into arrears, which may affect your credit rating and make it difficult for you to borrow in the future.

If you’re worried you fit into this category, there is help and support available. Call one of our friendly advisors and we can chat through some of the debt solutions available as you decide what to do next.

 

*OnePoll questioned a nationally representative sample of 2,000 adults aged 18 and over between 4th April and 9th April 2014, of whom 500 were Scottish residents.

by Shelley Bowers

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To find out more about managing your money and getting free debt advice, visit Money Advice Service, an independent service set up to help people manage their money.