‘Bank should have stopped me’

A customer who exceeded her credit card limit by 20 per cent argued that she should not have to pay it back because the bank should have stopped her from spending.

The woman took her case to the Banking Ombudsman.

She said the bank had behaved irresponsibly by letting her go over her credit limit by 20 per cent and she had not agreed to that credit limit extension.

She was charged interest and other fees.

She said the bank should let her off the overspent amount, as well as all the interest and charges associated with it.

Only then would she come to a repayment agreement.

She told the Banking Ombudsman she understood some credit cards allowed their users to go over the stated limit but she thought 20 per cent was too much.

The Banking Ombudsman said it was ‘‘standard industry practice’’ to sometimes allow customers to exceed their credit limits. That was to ensure they were not embarrassed or inconvenienced by having a transaction declined.

‘‘However, in [the customer’s] case we were concerned the bank had lent to her when she wasn’t in a position to meet repayment obligations, based on her income and expenses at the time.

‘‘The bank then made a goodwill offer but wouldn’t agree to reimburse [her] for the overspent amount because she had benefited from the transactions she made. However, it did agree to reverse interest and fees charged since she first exceeded her credit limit and to enter into a suitable interest-free repayment arrangement. This offer was conditional on [the customer] surrendering her credit card.

‘‘We advised this was a reasonable offer, which [was] accepted and the file was closed.’’

The ombudsman said, when a complaint about irresponsible or unaffordable lending was upheld, it would usually hold the customer responsible for repaying the amount but the bank should bear the cost and write off some or all of the interest and charges owing. An affordable repayment arrangement should then be agreed on.

The Banking Ombudsman said it was ‘‘standard industry practice’’ to sometimes allow customers to exceed their credit limits.