Debt-laden targeted by credit card firms

One in five people struggling with debts has seen their credit card limit automatically increased – a higher proportion than for cardholders in general, a charity has claimed.

Citizens Advice said 18 per cent of those struggling financially had seen the limit increased without request, compared with 12 per cent overall, reports The BBC.

It wants a ban on increases without a cardholder’s explicit consent.

The regulator has estimated that 3.3 million people are in persistent debt.

In a report published earlier this year, the Financial Conduct Authority (FCA) said that “customers in persistent debt are profitable for credit card firms, who do not routinely intervene to help them”.

Recent industry figures have also shown a rise in the use of credit, debit and charge cards.

The number of transactions grew by 12 per cent in the year to the end of June, the highest annual rate since 2008.

Meanwhile the value of spending also rose, accelerating to 7.2 per cent.

Citizens Advice said that poor affordability checks by lenders were making people’s financial situations worse.

“It is 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,” said Gillian Guy, chief executive of Citizens Advice.

“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,” she added.