Watch out if your credit card limit is increased

Plastic card companies have been accused of encouraging people into unaffordable debt

Easy credit can lead to financial difficulties (Getty)

Has your credit card company increased your spending limit? Almost 19 million credit card holders have had their credit limit increased without requesting it, according to new research.

While that may sound relatively harmless, the uSwitch research suggests that some 4.5 million of people handed a higher limit have seen their spending spiral as a result of the temptation of easy extra credit.

“With the increased limits unrequested, unwanted and a surprise, spending beyond their means without considering the repayments is an easy trap to fall into,” warns Tashema Jackson of uSwitch. “With household debt on the rise, providers shouldn’t encourage customers to bite off more credit than they can chew.”

Consent, and ultimately control over their finances, needs to be in the hands of consumers, she says, pointing out that many are in the dark about how they need to opt out of increases, or fail to do so because of the effort it will take them to contact their provider.

"We urge the FCA to introduce a consumer opt-in requirement for credit limit increases, which could greatly help consumers avoid unnecessary debt by ensuring that they are in better control of their borrowing," says Ms Jackson.

Last week the Nationwide became the first major credit card issuer to pledge not to increase customers’ credit card limit without asking. It’s time for others to follow and stop handing out easy and expensive credit to people who may not be able to handle it.

What you can do if you have your credit limit unexpectedly increased

If you find yourself being offered additional credit unexpectedly and miss the 30 day window to opt out, you can still contact their provider and try to reduce your limit.

If you want the extra increase as a safety net, it’s important that you stick to a careful budget and only spend what you can afford – not see the increase as ‘free’ money.

It’s also worth keeping an eye on any impact a credit limit increase has on your credit score, advises uSwitch.