Barclaycard tightens credit limits

by Gill Montia

Story link: Barclaycard tightens credit limits

Barclaycard, the UK’s foremost issuer of credit cards, has been reviewing the credit limits held by many of its customers, whilst at the same time rejecting an increasing number of applications for new cards.

The review has been underway since the beginning of 2007 and reflects general concern about the availability of high street credit.

However, it is likely to be accelerated by the Northern Rock crisis and the weeks of turmoil in the money markets.

Barclaycard has confirmed that since 2006 it has lowered credit limits for 500,000 cardholders.

These lower limits have generally been applied to customers who have gone over their limits or are in some other way over extended.

Currently around half of all applications for new Barclaycards are rejected and borrowers with poor credit histories are finding it particularly hard to be accepted as new account holders with Barclaycard, or any other provider.

In the six months to the end of June 2007, Barclaycard profits fell by 17%, partly as a result of bad debts.

Consumer borrowing has increased steadily over the past decade. A new trend to have emerged in recent months is for consumers to borrow against the increased value of their homes.