UK credit card limits cut by £3.1bn

Brits have seen their credit card limits cut by £3.1 billion in the last six months.

Since November, 1.8 million credit card customers have seen their credit limits slashed by an average of £1,600, according to new figures from MoneyExpert.com.

In February Egg cancelled the cards of 161,000 customers which it deemed to be a high risk, and many other card companies are now taking similar action – with borrowers in their 20s most likely to see limits cut.

"Credit card companies are becoming stricter in who they lend to and the amount of money their customers can borrow," said Sean Gardner of MoneyExpert.

“Overstretched consumers might look to resort to credit in a bid to make ends meet but they should not rely on it as a way of keeping spending."

However, the credit card market remains competitive and 0% credit card deals still remain, but people are being urged to use such discounts to gain time to reduce their debts.

“There’s nothing inherently wrong with taking advantage of a zero per cent credit card for a year as long as spending is controlled," said Mr Gardner.

"The warning lights should be shining brightly however if you find you’re going from card to card without making a dent in the amount you owe.

"If you don’t have a repayment plan in place it is time to get one.”

MoneyExpert data show some 980,000 people switch deals a month.

"With so many people needing credit you have to wonder whether they are managing their money well or merely papering over some serious financial cracks." Mr Gardner.

"However, it is almost always the case that you will save money by switching to a new credit card. It needn’t affect your credit rating to switch and credit cards can at least help people to stave off hard times. The best deals offer you interest free credit for as much as 15 months."