Charity wants unrequested extensions to credit card limits banned

A charity has called for unrequested extensions to credit card limits to be banned, arguing it is leading to worsening debt problems for thousands of people.

StepChange is calling on the Financial Conduct Authority to ban the practice and make it compulsory for credit card users to have to opt in to any increases.

It claims that, in some instances, credit limits are being increased when people already in financial difficulty ask their creditors for help.

A survey of the charity's clients found that 54% of those with credit cards had seen their limit increased without asking for it.

Of those, 49% said this had made their debt problems worse.

One in 10 credit card users (11%) said they approached their creditors for help with financial difficulty and subsequently saw their credit limit increased.

Previous data released by the charity suggests that more than 200,000 people asked it for help with £1.7 billion of credit card debt last year alone.

Credit card companies can decide to increase someone's credit limit without asking them as long as they give them a minimum 30-day window in which to decline.

StepChange chief executive Mike O'Connor said: "Before taking out any form of credit, people need the opportunity to decide whether it is the right option for them and if they can afford it.

"When their credit limit is increased without asking, these key decisions are taken away from them and they face the risk of taking out credit they cannot afford, which can turn into costly, long term debt.

"With tens thousands of people coming to us every year with multiple credit card debt and over 2.5 million people in the UK are already relying on credit cards for day-to-day living, these changes are now even more critical."