heads up: barclaycard a bit underhand here

[shamen]

Hi all,
Just thought id share this one up here as I was a bit surprised and it could land people in a bad position.

Before christmas I got a barclaycard initial, they only gave me an £800 credit limit but thats fair enough. I used the card over christmas and went to 750 in use, so sent a £150 payment just after christmas, bringing my credit in use down to £600. I used the card into the new year which took it back up to £740 in use, and got my january statement telling me the minimum payment was due 30th jan for £20 odd quid. OK, so ive used it heavily over christmas, but im paying it off in large chunks.

I never pay minimums, so I sent over another £150 on 25th jan for the january bill. So heres where it gets a bit interesting and this seems almost designed to catch people out.

On Saturday 28th jan a letter dated friday 27th jan drops onto my doormat telling me barclays are, on the 31st on jan, reducing my credit limit to £700 due to information recived from 'credit reference agencies'. This means that the monthly (januray) minimum payment was not actuallythe £20 odd quid shown on my statement, but was now at least £50. Basicly, if I had budgeted to pay barclays the minimum payment they were asking for, I then had one working day (monday 30th) to come up with, and deposit, the extra money this new letter warned me about, or id be over my credit limit and into charges country.

Thankfully, I had already sent over way more than that (150) so theres no risk that I would have gone over my credit limit when it is reduced, however this does seem to smack of an underhand business practice - what if I did not have the extra money this month, or what if I had not already sent over a large amount? It usually takes time for a payment to be applied to a credit card account so it seems not only was the situation trying to get me over my limit, but also not give me enough time to send over money to stay within the new limit they have decided to set.

Does anyone know often do credit card companies reduce peoples credit limits to below the outstanding amount on the card? What sort of notice period are they supposed to give? Reducing a limit to less than the balance on the card, while leaving only one working day to have enough money sent over to cover the 'new' minimum payment just seems like its designed to ensure people go over their credit limit and start getting hit with penalties. This is especially troubling to me, considering this is a card designed for people who are just getting back on their feet as far as credit is concerned. This situation seems almost engineerd to ensure a percentage of customers will fall into a penalty charging cycle.

Ive also looked at my creidt report from all three agencies - not a single balck mark, not a single late payment, 3 years of solid good credit history and scores rating me in the 'good' to 'very good' categories (depending on the agency I used). No mortgage debt, no public records and only £3k in outstanding credit card debt - all paid on time and with at least double (usually quadruple, if not more) the monthly minimum payment made going back over several years.

If that is information that barclays would consider reducing my creidt limit over, id be very concenred at whatt hey do to people with late payments or worse.

Anyways, just thought id give a heads up about what happened so hopefully people dont get stuck if this happens to them.

[leclerc]

Re: heads up: barclaycard a bit underhand here

they can reduce your credit limit but giving you just 4 days notice is not something that they can do.
I would add though, that there is no prescribed limit to lower the limit.

"121. Where the subscriber feels it is appropriate, the credit card limit should be reduced and notification given to the
customer. The subscriber should ensure that the notification includes, or signposts to, relevant contact details so"

Section 6 part 121 of the Lending code.

[Sapphire]

Re: heads up: barclaycard a bit underhand here

Disgusting .... I'm not au fait with the legalities of all this, but I would be tempted to write to them and ask what the information is that's been received from the Credit Reference Agencies, personally I'd be well pee'd off to think that they maybe saying something negative, especially as you know that you have a perfect or near perfect credit record, or is it just that Barclaycard are giving out bull s..t ?

[Shadowcat]

Re: heads up: barclaycard a bit underhand here

Hi Shamen and welcome,

As Sapphire says, write asking under the Freedom of Information Act for any information you want.

[Bill-K]

Re: heads up: barclaycard a bit underhand here

I agree - take them to task over this, although I'm not sure if the FoIA covers personal data. In any event, though, it appears that either a CRA is supplying them with false information about you, or BC are supplying YOU with false information about the CRA's.

Further to Leclerc's post - is there anything in the T&C's about this ?

[urbtaf]

Re: heads up: barclaycard a bit underhand here

Ive used Barclaycard, personal and business since it first started way back whenever with no trouble. Until last year, Then one daft problem after another. Dont bother with them much now.

[bluebottle]

Re: heads up: barclaycard a bit underhand here

My BS detector tells me BC are extracting the yellow stuff. Ask them to tell you EXACTLY what CRA has said and which CRAs have said it.

[shamen]

Re: heads up: barclaycard a bit underhand here

Thanks for the advice everyone.

I did a pleasant and well written email to Barclaycard asking them why the notice period was so short, why had they chose to reduce my limit and what data exactly had they received in order to make the decision to reduce my limit. I said I knew it was their chocie to do this, but I wanted some clarification about the reasons and notice.

Barclaycard took a few days to respond, but when they did the ever-so-helpful reply I got seemed to ignore everything I had written to them and told me, helpfully, that Barclaycard could not increase my credit limit and I should ask them again in 6 months. It seems the letter I had written was taken as a 'please raise my credit limit' request when it was nothing of the sort (bearing in mind, I specifically stated 'I respect your decision to reduce the credit limit, as it is your choice, and I am not asking for the limt to be raised again, I just want clarification around your reasons, and what data came from the credit reference agancies to make this decision')

Very helpful indeed. So I was going to raise the issue as a complaint, but just before I did I got an alert from my credit watch service from Experian : "over limit alert". On barclaycard. Sure enough, after inspecting my file, they are reporting me as a balance of £766 on a limit of £700, last updated on "2nd Feb 2012"

This was confusing, as my balance on Feb 1st was £625 ish. was £766 on Jan 28th and i sent over that £150 payment. The credit limit was not reduced to £700 until February 1st. So I checked the online access to barclaycard, sure enough what I see is correct. They list my payment as going through correctly in January so my balance was £625 ish, then my credit limit is reduced in Feb to £700, so im still under my credit limit.

What they then decide to report to the CRA is my balance at the beginning of january (£776) with my credit limit from the beginning of February (£700) which basicly makes me look to lenders like not only have I had a limit reduced by a creditor, but that I have intentionally gone over that new limit immediately. However, thats about as far from accurate as one can get.

Ive fired this off to them

In January 2012, my card balance was just under £800. You then informed me you were reducing my creidt limit to £700. I understand this is your right and i have no complaint there. However, I wanted to complain today about two things.
First, when I wrote to you to ask why the limit was reduced with only a few days notice and asking for the details of the data you recieved from the credit agency, i recevied a template reply about raising credit limits and how you cannot raise mine. Not really helpful at all. Why was I not given more notice of this credit limit change or any information about the mysterious data 'from the credit agencies'


Second, you are now reporting to credit agencies that I have exceeded my credit limit, which is damaging my credit history. I have never exceeded my credit limit with barclaycard. In Jan 2012 I recived your letter advising me of the reduction in credit limit. I had already sent over enough money to bring my account balance within the new limit (£625 balance) - this happened in january as reported by your systems. However, you are reporting to the credit reporting agencies (as of feb 2nd) that my balance is £66 over my credit limit which is having a negative impact.

Jan 2012: Balance 765
25th jan 2012: Paid £150

26th Jan account balance was (after one small purchase) £625
28th Jan 2012: Barclaycard notified credit limit reduction as of Jan 31st to £700
Jan 31st: credit limit reduced and new balance £625
Feb 2nd: Barclaycard reporting to Equifax credit agency that my account limt is £700 with a balance of £766, showing my account as 'over credit limit' when at no time has it been over limit.

I hereby formally give you notice under the Data Protection Act that I require this inaccurate data to be recitified - namely that at no point during my contract with barclaycard has my account exceeded my credit limit and as such your reporting of this information to the credit agencies is inaccurate and causing distress and harm, as well as potential financial implications to my unblemished credit history.

[shamen]

Re: heads up: barclaycard a bit underhand here

Well, thats one thing good about barclaycard, they do respond quickly to complaints. A rep called me up to discuss the issues.

They wouldnt elaborate much on what the internal business decision was about the credit limit, but they did say that the data from the CRA's reflected borrowing from other lenders (eg, I have £2.5k in credit card debt over 4 other cards - though they are all less than 50% in use and all paid more than minimums every month). ho hum. Either way, thats their decision and at least I have a bit of an answer there

They acknolwledged the notice period was too short - the letter was sent by them (they claim) on the 26th - funny that its dated the 27th - though they agree that either way it was likely to arrive on saturday 28th which gave only one business day to resolve it. They are taking an 'action item' to have the team concerned look into their practices (eg, nothing will be done IMHO)

their explanation for the over limit on my credit file has me livid. Their systems apprently report balances and credit limits out of sync. This means that in february, they report to the CRA the balance on my last statement (january £766 ish). However, they report credit limit changes immediately. This means that my limit was reported to the CRAs on feb 2nd but Barclaycard reported my balance from my january statement to them at the same time, making it look like Iw as over my limit (700 limit, £766 balance) . Amazingly, this means that anyone who has their limit reduced to below their outstanding statement balance will always be over the limit on their credit file the following month, even if they pay the outstanding balance to below the new limit and are not over the limit at all

I pointed out the problem with this and that its inaccurate data under the DPA, however they explained that they cannot retroactively fix this. They have offered to put my limit back up to £800 from the 14th so that it no longer looks 'over the limit' on my file, but when I asked what about the period Feb 2nd - Feb 14th they said there is nothign they can do at all. Even when I said they are braking the conditions of the data protection act, they said it was normal and they could do it.

Ive asked them to follow up in writing to me these reasons and the actions they will take, as theres no way im not taking that to the ICO. Not just for me, but for anyone else put in that position by barclaycard.

[ticklegpz]

Re: heads up: barclaycard a bit underhand here

Hi i believe you can complain to the credit ref agencies about inaccurate imformation on your credit file and possibly have it removed.

[bluebottle]

Re: heads up: barclaycard a bit underhand here

I believe the OFT took credit card firms to task over this sort of practice some years ago. Is it time to rattle the OFT's cage about this again?