Banks may be taking cards from reliable customers and giving them to riskier ones instead in order to boost their profits, a senior MP has suggested.
Banks may be taking cards from reliable customers and giving them to riskier ones instead in order to boost their profits, a senior MP has suggested.
The chairman of the treasury select committee, John McFall, said companies might be withdrawing cards from people who pay their bills on time.
The chairman of the treasury select committee, John McFall, said companies might be withdrawing cards from people who pay their bills on time.
Instead, he said, they were being given to people who pay interest because they could not clear their debts.
Instead, he said, they were being given to people who pay interest because they could not clear their debts.
UK payments association Apacs denied banks had brought in any such policies.
UK payments association Apacs denied banks had brought in any such policies.
It said companies were merely looking at credit levels and how they could "rationalise" them.
It said companies were merely looking at credit levels and how they could "rationalise" them.
Making a profit
Making a profit
Mr McFall has previously complained that credit card companies were not being transparent. Now he says they may not be being fair to their customers.
Mr McFall has previously complained that credit card companies were not being transparent. Now he says they may not be being fair to their customers.
"Are we witnessing a situation where credit card companies are taking cards away from perfectly safe customers who pay their bill in full every month on the same date for years - and giving it to customers who are riskier?" he said.
"Are we witnessing a situation where credit card companies are taking cards away from perfectly safe customers who pay their bill in full every month on the same date for years - and giving it to customers who are riskier?" he said.
"And if they are doing so, then their methods have to be called into question."
"And if they are doing so, then their methods have to be called into question."
The letter inferred that it was due to a change in my circumstances and that it was for my own benefit Steve Perry, credit card holder
The letter inferred that it was due to a change in my circumstances and that it was for my own benefit Steve Perry, credit card holder
Jemma Smith from Apacs, the trade association for payment services, said companies have the right to make changes as they see fit.
Jemma Smith from Apacs, the trade association for payment services, said companies have the right to make changes as they see fit.
"A credit card company is a business and it will always be looking to do one of two things: either making sure that it's lending money responsibly to people who can afford to repay any money that they're borrowing, and secondly, as a business that needs to make a profit, deciding whether it wants to give you and I a card," she said.
"A credit card company is a business and it will always be looking to do one of two things: either making sure that it's lending money responsibly to people who can afford to repay any money that they're borrowing, and secondly, as a business that needs to make a profit, deciding whether it wants to give you and I a card," she said.
"And at any time it may decide to take that business away."
"And at any time it may decide to take that business away."
Credit card holder Steve Perry said he recently had his credit limit dramatically cut, despite having a near-perfect credit rating.
Credit card holder Steve Perry said he recently had his credit limit dramatically cut, despite having a near-perfect credit rating.
Before Christmas, he received a letter from Goldfish saying his credit limit had been reduced from £11,300 to £500.
Before Christmas, he received a letter from Goldfish saying his credit limit had been reduced from £11,300 to £500.
He told BBC News 24: "The letter inferred that it was due to a change in my circumstances and that it was for my own benefit."
He told BBC News 24: "The letter inferred that it was due to a change in my circumstances and that it was for my own benefit."
'Shop around'
'Shop around'
The BBC's Sarah Pennells said credit card company Egg was recently accused of closing the accounts of some reliable customers.
Earlier this month, it emerged that internet bank Egg were to withdraw credit cards from 161,000 of its customers who it thought posed an unacceptably "high risk".
Now there is some evidence that credit card companies are cutting the limits of older card holders, who pay off their balances in full, and raising limits for younger ones who may not, our correspondent added.
Cardholders were given 35 days' notice of the withdrawal and told they could continue making minimum monthly repayments on their balances but could not spend any more on their card after the deadline.
Apacs said more than two-thirds of adults in the UK have a credit card and 68% of them pay off their borrowing in full every month.
The BBC's Sarah Pennells said Egg was being accused of closing the accounts of some reliable customers.
She said this was evidence that credit card companies were cutting the limits of older card holders, who pay off their balances in full, and raising limits for younger ones who may not.
Apacs said more than two-thirds of adults in the UK have a credit card and 68% of them pay off their balances in full every month.
It advised customers who were not happy with their credit card company to vote with their feet and choose from among the estimated 1,000 credit cards available in the UK.
It advised customers who were not happy with their credit card company to vote with their feet and choose from among the estimated 1,000 credit cards available in the UK.
Have you had a credit card cancelled despite being a good customer? Have you been issued a credit card when you thought you shouldn't be?
Have you had a credit card cancelled despite being a good customer? Have you been issued a credit card when you thought you shouldn't be?
Do you have any questions about the issues raised in this story? BBC News 24 will read out a selection of your questions to a representative from APACS after 10am.
Do you have any questions about the issues raised in this story? BBC News 24 will read out a selection of your questions to a representative from APACS after 10am.
Send us your comments and questions using the form below:
Send us your comments and questions using the form below:
