Notice of defaults: everything you need to know
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Being offered a higher credit limit might seem great, but if you can’t afford to borrow more, it could cause problems.
If you’re just about managing to keep track of all your borrowing and repayments, how would you cope if you were suddenly offered a higher credit limit without you asking for it? Would you be able to resist temptation and only use it as an extra lifeline in an emergency or would you be tempted to borrow a bit more money?
This isn’t an unlikely situation … research* carried out for us found that 15 million British credit card holders say their credit card limit was extended in the past year without them requesting it.
Why has it been extended?
Having the limit extended on your account isn’t necessarily a bad thing, it’s actually a sign that your lender thinks you’re a responsible borrower … as they think you can handle more credit.
It’s handy if you’ve been thinking about taking on more credit (and you can afford the repayments), as it means you’ll have access to more without having to apply for it, or if you like to have some money there in case of an emergency.
However, no one knows how you manage credit better than you. Be honest with yourself. If you are already struggling to make your repayments every month, don’t think you’ll be able to pay back any more than you already are, or will be too tempted to spend the money frivolously, you don’t have to accept the credit limit increase. You can turn down any credit limit extensions online, by post or on the phone, and you’ll also be able to opt out of any future offers to increase your credit limit.
Getting it lowered
Even if your credit limit has been extended, it doesn’t mean you have to keep it at this level. If you don’t want access to the extra credit, you can speak to your credit card provider and ask them to reduce it. As long as you’re not trying to lower the credit limit below your current balance, they should have no problem changing this for you.
Managing several debt repayments can be hard, so any more borrowing on top of this could push you into the red if you’ve not factored this into your budget. If you’re starting to struggle with your borrowing, it might be a good idea to make a budget plan so you can see how much money you’ve got coming in every month, and what you’re spending it on. You can put a budget together yourself, or you may want to ask for help from a debt expert with this.
If your debt has already become more problematic and you’re finding it difficult to cope, you could speak to a debt advisor about the different debt solutions available, including IVAs and DROs and see what’s right for your situation.
*OnePoll questioned a nationally representative sample of 2,000 adults aged 18 and over between 11th February and 23rd February 2015, of whom 453 were Scottish residents.
by Kyri LevendiBack to blog home