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Barclays’ credit crackdown
(24-09-07) - Barclays has announced that half a million customers have had their credit limits cut in an ongoing crackdown on consumer credit
The bank, which issues the UK’s most popular credit card, the Barclaycard, has also been rejecting around 50 per cent of all new applications in a bid to reduce bad credit.
A spokesman for the bank said: “We have been going through a review since 2006 and lowered credit limits for 500,000 cardholders where customers are over their limits or where they have become overextended.”
Barclaycard recently announced a 17 per cent drop in profits in the first half of the year, while bad debts soared to £1.5 billion.
The well documented troubles of Northern Rock and in the global stock market are likely to cause a continued tightening of belts in the consumer credit market, warned Chris Eagle, CreditChoices.co.uk commercial manager.
“The recent turmoil in the US stock market was triggered by bad debts in the sub-prime housing market, which borrowers were unable to repay. The result is that even here in the UK, lenders are becoming more cautious about lending and are worried about the likelihood of customers being able to maintain repayments,” he said.
Debt advice charities including Citizens Advice and the Consumer Credit Counseling Service (CCCS) have dealt with increasing numbers of concerned borrowers over the course of the year as interest rates have gone up and banks have made it more difficult to obtain credit.
