Have you been hit by shock Barclaycard credit cuts?

DURING my LBC radio show last week, I was inundated with angry calls from outraged Barclaycard customers after they were notified by the firm that their card credit limits were being slashed.

WHAT IS BARCLAYCARD DOING?

The firm is cutting credit limits for many card customers from the end of May – in some cases, substantially. Mary, from Chester, told me her limit was being reduced from £18,000 to £250; while Sean, from Oxford, will see his cut from £11,000 to just £300. The firm has not said how many accounts are affected, but if you’re a customer and haven’t heard by now, chances are you’ve escaped the cull.

WHAT DOES BARCLAYCARD SAY?

My request for an interview was declined but the firm released the following statement: “We have a duty of care to our customers to make sure their credit limits are affordable so they are able to manage their borrowing effectively.

“To make an affordability assessment, we review our customers’ finances across their full lending portfolio to ensure we are lending responsibility and that they are not borrowing more than they can comfortably afford. If customers feel they can afford a higher limit than communicated, we ask they get in touch with us so we can re-review our assessment. We are extending the time customers have to provide this additional information until the end of May.”

MY VIEW

All those who have contacted me were shocked and had no idea why their limit was being reduced. Many told me they had never missed a payment and, in some cases, had been customers for up to 15 years with no financial issues elsewhere, and were still in active employment.

My view is that Barclaycard is simply carrying out a mass due diligence exercise of its customers using an “opt in” concept, whereby credit limits are reduced unless you can prove your financial standing.

CAN BARCLAYCARD DO THIS?

The short answer is “yes” and to take this further, Barclaycard has an obligation to carry out affordability checks to make sure credit limits are set at sensible levels, although it didn’t need to do it in such a drastic way as this.

The manner in which it handled this, and the drastic cuts, have clearly not gone down well.

As for what you can do, Barclaycard is under pressure to reinstate rates for steady customers but you should shop around for another card.