Credit card companies should be banned from raising limits without permission, says Citizens Advice

One in five people who are struggling with credit card debt say their card provider has raised their borrowing limit even though they haven’t asked for it

Credit card companies should be banned from raising customers’ credit limits without asking their permission to help combat the rising level of problem debt in the UK, according to a leading charity.

One in five people who are struggling with credit card debt say their card provider has raised their borrowing limit even though they haven’t asked for it, a survey by Citizens Advice found.

People struggling with long-term credit card debt were more likely to have their limit raised, with 18 per cent seeing their maximum borrowing increased in the past year without requesting it, compared to 12 per cent of all credit card holders.

The UK economy has increasingly been fuelled by ballooning household debt over the last year as wages have remained flat and inflation has jumped.

In July, credit rating agency Moody’s warned that Britain's lower-income families were dangerously exposed,amid s igns of an economic downturn linked to Brexit.

The agency's warning came as the Bank of England revealed that the amount borrowed by UK consumers through credit cards, unsecured loans and overdrafts had jumped 10 per cent in the year to

Read more

July, reaching £200bn for the first time since the financial crash of 2008.

Official figures also show real earnings have declined. Average pay rose at an annual rate of 2.1 per cent in the three months to June - well below the inflation rate of 2.6 per cent in the year to the end of June.

Overall consumer spending was up 1.3 per cent in the year to July, the Office for National Statistics said in a separate release this month.

Citizens Advice chief executive, Gillian Guy said that “irresponsible” offers of further credit were pushing people into long term debt cycles.

Her charity helps thousands of people each year struggling with large debts on several different cards which “will take them years to pay off” she said.

“It’s clear that irresponsible behaviour by some lenders is making people’s debt situation worse - such as offering more credit when they already have thousands of pounds of unpaid debt,” Ms Guy added.

“The regulator must ensure that lenders are taking into account people’s whole financial and personal situation before agreeing further credit. Banning firms from raising existing customers’ credit limits without seeking their express permission first would also help people take more control over their finances.

“Lenders must act responsibly and direct people struggling with debt towards free and independent advice and support - rather than more credit.”