How to stop your credit limit from being slashed
James Daley gives advice on staying in the banks' good books and the best new deals around
Saturday 09 February 2008
Britain's credit card companies have been tightening their belts over the past few months – raising interest rates and fees, cutting back credit limits and turning down an increasingly large number of applications. Last week, Egg outraged consumer groups when it went one step further – unveiling plans to close the accounts of more than 160,000 loyal customers, who it no longer wanted on its books.
The internet bank, which was bought by Citigroup last year, said that these customers were being booted out to reduce the levels of risk across its credit card business. However, a large number of those affected claim to have never stepped outside of their credit agreement, raising suspicions that the bank also used its review as an excuse to clear out some of its less profitable clientele – those who regularly clear their balances and never rack up any interest.
Unfortunately, it's unlikely that Egg will be the last bank to make such a brutal move. American Express and a handful of other major lenders have slashed the credit limits of thousands of customers since last autumn, in a bid to claw back their exposure at a time when capital is still hard to come by, and the economic climate is worsening.
The banks have also been under pressure to keep up with new European regulations, which means they have to keep more money on their balance sheets for every pound of potential credit they grant to their customers.
Keeping a good credit rating
The uncertainty in the lending market means it's well worth keeping close tabs on your credit arrangements over the coming months. If you're the kind of person that likes to keep a few cards gathering dust at the back of your wallet, just for emergencies, Mike Naylor of Uswitch.com, the comparison site, says you should consider whether you really need them. "It can be a security risk to have lots of different cards, especially if you don't know where they all are," he says. "So it may be worth working out which ones you really need and getting rid of the rest."
It's also a good idea to take a look at your credit file, to see what kind of shape you're in. Egg says it has been targeting customers whose credit scores have deteriorated since they first became customers of the bank. With a whole multitude of factors affecting your overall credit score, it's easy to be completely oblivious to any changes in your rating. For example, failure to inform the credit agencies that you've split up with a former partner can mean your own score continues to be affected by their behaviour. Failure to get yourself on to the electoral roll when you move address will also work against you.
You can check your credit file by visiting the websites of any of three UK credit agencies – www.experian.co.uk, www.mycallcredit.co.uk and www.equifax.co.uk – or by using services such as www.checkmyfile.com. For a few pounds, you can check your credit file instantly, and start ironing out any inaccuracies or unwanted financial ties.
If you're one of Egg's unwanted customers, James Jones of Experian says you needn't worry about being left with an even worse credit file after your account has been closed down. In fact, the move may work in your favour. "Depending on the circumstances of the individual and policies of the lender, it could have a positive effect on your credit rating as a lender might view an application from someone with a lower number of cards as more attractive," he explains.
Finding a new deal
If you're looking for new credit cards, they're still relatively easy to come by for all but those with the worst ratings. And even then, if you're willing to put up with an APR of over 30 per cent, then there are still one or two lenders who are likely to take you on. Websites such as www.uswitch.com and www.moneyfacts.co.uk allow you to search for the best deals currently available, while www.moneysupermarket.com goes a step further by listing cards that fit specific credit profiles. This is useful for identifying lenders that are more likely to accept your application.
"Every time you apply for a card, it leaves a footprint on your credit file," says David Black, head of banking at Defaqto, the financial analysts. "So you don't want to over-apply for credit."
If you're looking for a card which offers 0 per cent for balance transfers, most now charge fees of between 2 and 3 per cent. There are, however, three cards which still offer 0 per cent transfers for no additional fee: Britannia Building Society (five months at 0 per cent), Ulster Bank (six months at 0 per cent) and Norwich and Peterborough Building Society (six months at 0 per cent).
If you're after a card that will pay you cashback when you use it, Black recommends the American Express Platinum card, which offers 5 per cent on purchases (of up to £4,000) made within three months of taking out the card. After that, customers receive 0.5 per cent on the first £3,500 spent a year, 1 per cent on the next £6,500 and 1.5 per cent on anything after that.
Alternatively, for car drivers, Black suggests the Shell Mastercard, which pays 3 per cent on all fuel purchases at Shell petrol stations and 1 per cent on all other transactions. However, you have to make at least one purchase at a Shell station each month to get your rebate.
Money roundup video: It's getting harder to sort out a mortgage
Women born in 1950s facing severe financial hardship over pensions could have fates changed by Ros Altmann - should she choose to help
Five Questions On: GB Energy's new tariff
Simon Read: You're guilty until proven innocent when HMRC sends in the tax credit detectives
How to start your own internet business
- 2 California man brutally beat 82-year-old Sikh grandfather he mistook for 'one of those people'
- 3 School kitchen manager 'fired from Colorado school for giving hungry students free lunches'
- 4 Amy Schumer: 'I'm 160lbs and can catch a d**k any time I want'
- 5 Isis executes three gay men by dangling them from top of 100ft building and letting go
Thousands of teenage girls enduring debilitating illnesses after routine school cancer vaccination
Migrants in Kos: Photos show real tragedy after Brits abroad complain of 'awkward' holidays
British tourists complain that impoverished boat migrants are making holidays 'awkward' in Kos
Michael Gove determined to scrap the Human Rights Act – even if Scotland retains it
Threat to scrap Human Rights Act could see UK follow Nazi example, warns UN official
Church of England 'one generation away from extinction' after dramatic loss of followers
iJobs Money & Business
£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...
£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...
£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...
£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...
Day In a Page
Set within a church conversion in Bermondsey, this two-bedroom maisonette combines existing features, such as original arches and brickwork, with a contemporary finish.
In the pretty market town of Bungay, this grade II-listed Mill House is arranged over four floors, offering four bedrooms and three reception areas.
This four-bedroom Edwardian home offers a combination of original features and contemporary design after a renovation by the current owners.
This four-bedroom home offers a vaulted ceiling in a breakfast room that's ideal for summer entertaining with doors that open to the patio and garden.
On the market for the first time in more than 50 years, this six-bedroom home is a project with vast potential - spread over three floors of living space.
This five-bedroom home comes with a range of outbuildings including a large barn which could be converted into a self-contained granny-flat or rental.
Surrounded by rolling countryside, this four-bedroom barn conversion comes with a self-contained, one-bedroom annexe that could serve as an office or a holiday let.
Located near Harrogate town centre, this five-bedroom Victorian terrace is arranged over three storeys while a current study serves as an optional sixth bedroom.
A ground-floor flat in a country house, located a mile from Sway; this two-bedroom home would make an ideal weekend retreat on the edge of the New Forest.
On a popular residential lane in Caterham on the Hill, this four-bedroom family home offers a secluded garden and a convenient location for local schools and public transport.
Just a short walk from Westerham green, this three-bedroom cottage has a light kitchen with exposed brickwork and double doors that lead to a south-facing garden.
In a prime spot opposite the River Thames, this one-bedroom flat has an 18sq ft reception room with glass doors that open out to a private terrace.
Set in the hills above Llanwrda Village, west Wales, this 18th-century three-bedroom farmhouse has holiday-let potential from a separate barn conversion and annexe.
This charming end-of-terrace townhouse is arranged over three floors, with two double bedrooms and a private courtyard garden located at the rear of the property.
Located in the University area, this semi-detached five-bedroom home is arranged over three floors - there's even a rear garden and off-road parking too.
Only a few minutes' drive from the charming town of Marlow, this two-bedroom home sits on the private riverside estate of Harleyford.
This detached four-bedroom home in Middleyard is arranged over two floors, with features that include a wood-burning stove and bespoke oak staircase.
In a row of eight detached Georgian residences, this five-bedroom home offers views of The Sound, Mount Edgcumbe and Cornwall from its impressive veranda and full-length balcony.
If you love cooking for friends this two-bedroom flat - complete with views of the iconic Battersea Power Station and an open-plan kitchen/dining area - will go down a treat.
Located above Grasmere village, this five-bedroom home is arranged over three floors and offers countryside views across Grasmere Lake towards Silver Howe.
Surrounded by the Western fells, this five-bedroom Georgian home retains many original features including panel-plastered ceilings, sash windows and fireplaces.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B, subject to change of use permissions.
A former period coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, office, kennels and an outbuilding that's currently used as a gym.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
This five-bedroom home is arranged over three floors of a converted Victorian hospital, offering spectacular views of the Pentland Hills - only three miles from the city centre.
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away