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classixuk

Why It Could Be So Easy To Run Up Massive Debts

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Last week I received an email from paypal and ebay (not a spoof one either) saying that they had reset mt password as they had reason to believe my account had been compromised.

I decided that incase it ever happens again I should have a credit card with a low credit limit (maybe £500) attached to my paypal account.

So last week I applied online to a company I've never used before (MBNA) for a regular Visa. I didn't do any shopping around, just looked for a company who took applications online.

Yesterday I received a letter:

"Dear Mr Classixuk,

We're pleased to welcome you to MBNA and are more than pleased to tell you that you've been accepted for a platinum plus card with an initial credit limit of £5500."

My eyes nearly popped out of my skull. £5500 just like that? That's more than my present credit limit on my personal credit card!

I've never used this company before and now for the scary part...

When I first came back to the UK in 1998 I lived with my parents for around 6 months and one of my "redundant" bank accounts is still registered at that address. Thinking along the lines of protecting myself even further, I registered that bank account with the card.

As far as MBNA were concerned I'm 28, living with my parents and earning just £200 per week!!!

Imagine for one second someone in those very circumstances receiving a new credit card with a limit of £5,500 just before Christmas. Unbelievable! No wonder we've got people with no financial nouse purchasing BTL properties with the plastic as deposit.

Needless to say that it looks as though i'l be asking for my regular credit card company to lower the limit to around £500 on my card, and this new card will be my personal credit card ( I don't worry about interest as I always pay the balance in full each month by direct debit).

What about the rest of you? Do you consider £5,500 too high a credit limit under the circumstances? Any one up for discussion about the credit limits (both ridiculously high and ridiculously low) they've received in the past from these companies? Perhaps I'm just out of touch and £5K and up is the norm on credit cards now?

My present credit limit on the personal card I hold is £1500. Business card is £2500. The lowest ever credit limit I was offered was a paltry £200 by Capital One about 6 years ago! Perhaps I should have told them I was living with my parents on minimum wage!

:lol:

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When I first went to Uni (about 10 years ago) everyone seemed to get a student Barclaycard with about a 500 UKP limit. If you wanted to buy a one-off expensive item (such as a computer) you had to ask them very nicely first.

I never bothered with one of those, instead I waited til I got a job and applied to my regular bank, who promptly rejected me! [ All I wanted it for was the insurance when buying stuff online ] I reapplied and they accepted me the second time, with about a 2k limit I think. Then my job (fixed short-term contract) was finished and I went back to being a student. It seemed like every 6 months my credit limit was upped by about 500 quid. My typical outstanding balance was probably about 200 quid (for flights home), paid off in full each month.

So as my income fell, my credit limit rose. By the time I finished the second stint of uni, my credit limit was about 8k: equal to an entire year's stipend (grad students get decent grants, unlike undergrads). It scared me that I could borrow an entire year's income at some ridiculous APR!

I think what I'd ideally like is a low-limit: say 500 quid but with the option of increasing it for _single, named transactions_ (like a hotel bill, or piece of expensive equipment). I could write to them and name the vendors and approximate amounts in advance perhaps.

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:lol:

2.5K on my card, I earn 26K so that's quite fair - high street bank. Paid off each month by DD.

It's not just the individual limits that are the problem though, it's the number of cards you can get, seemingly without checks...

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£5000 sounds about average. Until recently I had 5 cards, 1 for personal use and two for business (1 visa and 1 mastercard as sometimes you cant always use visa) and two others from ages ago that I hadn't bothered to shut down. All of them had about £5000 limit and I had to keep asking the banks not to increase that limit as they would try to this every 6 months.

Anyway I had a total of £25,000 credit available which was way too much but I'm sure I could have had double that by now if I wanted. Also, when I asked, the banks seemed very reluctant to decrease the credit limit.

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My Capital One got raised to 10K - I earn £25k +Overtime.

DOES NOT MEAN YOU HAVE TO USE IT!!!

They could could not give a 'flying f*ck' whether you can afford it. Its down to the individual to show restraint Im afraid.

TB

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I have an MBNA card with a £21k limit, and one with First Direct at £22k. I earn about £24k a year gross.

I don't owe anything on either card, but as an experiment I tried asking for a credit limit increase every 6 months or so just to see how far I could get them to go - its scary really just how much they will lend. I also got a letter from MBNA the other day saying the were offering me a "guaranteed" £10k loan without having to complete an application form, it went straight in the bin.

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Imagine for one second someone in those very circumstances receiving a new credit card with a limit of £5,500 just before Christmas. Unbelievable! No wonder we've got people with no financial nouse purchasing BTL properties with the plastic as deposit.

In a similar vain, recently I received 3 items of post, all on the same day, from banks / cc companies trying to loan me various sums (all said I was 'pre-approved' presumably because I had accounts with them all and gave details of what they would loan etc)... I suspect they are praying on people in time for christmas. I tore them up (I've no need for them at all)... but on that one day I was offered almost £30,000 of credit :huh::blink:

Credit card limit... I'm not sure what mine is... somewhere around £17k I think (for just the one card).. which is about 1/3 of my income. I keep on meaning to phone them up and get the limit reduced, to reduce the losses if someone skims it etc, but anyone whose tried phoning MBNA up knows what a hassle it is. Anyway so long as I inform them of the losses quickly (I check online every day or two to do my accounts), it's their problem and their loss. :lol:

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I have an MBNA card with a £21k limit, and one with First Direct at £22k. I earn about £24k a year gross.

I don't owe anything on either card, but as an experiment I tried asking for a credit limit increase every 6 months or so just to see how far I could get them to go - its scary really just how much they will lend. I also got a letter from MBNA the other day saying the were offering me a "guaranteed" £10k loan without having to complete an application form, it went straight in the bin.

Thats unbelievable. Imagine trying to pay back £21k let alone £45k on 24k a year. Maybe give them 500 a month. Best part of 20 years to pay back me thinks.

Im all for tightening credit card limits and sharing of credit card information. There was a good post on motley fool about every individual having a limit and it banks loaned above this personal limit, the individual was not responsible to pay it back. I like the sounds of that.

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Thats unbelievable. Imagine trying to pay back £21k let alone £45k on 24k a year. Maybe give them 500 a month. Best part of 20 years to pay back me thinks.

It is unbelievable, perfectly true though. I originally applied for the MBNA in about 1997 when I was living with my mum, & earning about £10k. I think I started off with a £1k limit and they've gradually increased it from there, but have never asked me to state what my salary is, so as far as they know I could stil be earning 10k !

The First Direct one I've had since about 1998, also starting off with a limit of about £1k. I do use this one for groceries, petrol etc but its always paid off in full each month without fail by DD. First Direct do know exactly what my income & expenditure are because pretty much all of it goes through the current account I have with them.

I think the minimum payment on the MBNA card is 2% of the balance, and 3% on the First Direct, so to owe £21k and £22k on them would mean minimum payments totalling £1080 each month!

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Jesus!

I thought that £5.5K was a steep limit (especially to a new customer)! Now you guys are telling me that you have cards with limits of £20K upwards for EACH card!

How long have you been with these companies?

£10K with Capital One? A friend of mine is with Capital One and she can't get past about £800 even though she owns her home and works full time.

Maybe I'm an old fashioned 28 year old LOL. If you can't afford it, don't buy it is my mantra.

Out of interest, what are the arrangements for paying your credit card bills (for those of you with limits of £10K and above)? Do you pay off the amounts owing on the cards in full in each month, or do you actually use the card for credit? I'm wondering if the credit card companies offer higher limits to those who they are "making money from"? I have a Capital One card with a limit of £1,500, and have had it since 2001! When i used to use it I paid off the balance in full every month. Not once have they offered to up my credit limit! Perhaps they don't believe in loaning me anymore interest free money for my purchases LOL!

Would it be too dangerous to discuss the strategies of getting excessively high credit limits on credit cards? Nah, I don't think so. So go on, spill the beans all you plastic fantastics. How did you get such high credit limits...what was your original limit as opposed to the limit you have now, which companies are you with, how long have you been with them, how often did your limit get raised and did you ask or was it offered, and do you pay off the balance in full or use the card for it's true purposes?

This should be interesting!

I think what I'd ideally like is a low-limit: say 500 quid but with the option of increasing it for _single, named transactions_ (like a hotel bill, or piece of expensive equipment). I could write to them and name the vendors and approximate amounts in advance perhaps.

That's an excellent idea! Someone should offer that service.

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Guest rigsby II

I decided that incase it ever happens again I should have a credit card with a low credit limit (maybe £500) attached to my paypal account.

I did the very same thing only £300 max.

I asked the question, so if someone defrauds me and takes out £5000 in one go, I am only going to get charged at the most £300 and then we can discuss the fraud issue and get my £300 back.

They said no you will get walloped with the £5000 on your bill, the £300 limit means jack in this case. They can't always stop the transaction. (although they discuss the fraud bit later)

Having said that, they have on a couple of ocassions stopped me paying at petrol stations due to unusual payment habits - card declined, and they have phoned me up at home when I have made a purchase online for the same reason.

Halifax VISA

Edited by rigsby II

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Would it be too dangerous to discuss the strategies of getting excessively high credit limits on credit cards? Nah, I don't think so. So go on, spill the beans all you plastic fantastics. How did you get such high credit limits...what was your original limit as opposed to the limit you have now, which companies are you with, how long have you been with them, how often did your limit get raised and did you ask or was it offered, and do you pay off the balance in full or use the card for it's true purposes?

The secret to getting a high limit seems to be to reliably pay off the balance in full every month. I know people with six-figure incomes who have trouble getting even a £5k Visa limit simply because they often forget to pay the bill for a couple of months. Lenders seem to prefer reliable payers on low incomes, to unreliable payers on high incomes.

Edited by Neil D Possitt

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I logged into Barclays online banking the other day and there was an big advert saying how i was pre-approved for a barclays platinum card. I didnt think that i qualified for it, you have to have a decent wedge of cash kicking around in thier crappy accounts which im not prepared to do.

I applied for it and suprise suprise even though i was "pre-approved" i didnt qualify for it BUT they sent me a letter just needing my signature for a 'normal' Barclaycard. I dont want a normal one, i wanted the shinny silver one so i binned it.

That was last week, this morning i've had a letter from barclays for a 'fast-track' loan, ive obviously come onto thier radar now as needing cash. Im tempted to fill out the form (it would take less than 2 minutes) and fill in the required amount as £15,000,000.

Just goes to show though that when they think they have baited you in they will keep advertising at you to take on debt, i dont think ive seen the last of loan-targeted-mail yet.

Out of interest though guys, Ive never had a credit card and one of the reasons i applied for the platinum card was to increase my credit rating, im concerned that when i apply for a mortgage i wont have a decent credit rating because i dont borrow money. Does me applying for a CC and not accepting it make my rating worse?

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I also got a letter from MBNA the other day saying the were offering me a "guaranteed" £10k loan without having to complete an application form, it went straight in the bin.

I used to do this until I recently read that scum are using unopened pre-approved loan and credit card offers for the purposes of identity theft. The article didn't go into too much detail, but I guess it doesn't take much to get a loan under someone else's name when it's already been approved: "Hello, Mr. Pelvis here! £10,000? Ooh, yes plase! Oh, I'm currently living at 123 Acacia Avenue - spat with the missus don't you know, so if you could sent the bumph there for the time being I'd be eternally grateful..."

Needless to say that I'm now very worried about all the masses of loan/credit card offers I've slung away unopened! Given that, does anyone have any advice on my options? I'm not terribly up on credit checks and the like!

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I did the very same thing only £300 max.

I asked the question, so if someone defrauds me and takes out £5000 in one go, I am only going to get charged at the most £300 and then we can discuss the fraud issue and get my £300 back.

They said no you will get walloped with the £5000 on your bill, the £300 limit means jack in this case. They can't always stop the transaction. (although they discuss the fraud bit later)

Having said that, they have on a couple of ocassions stopped me paying at petrol stations due to unusual payment habits - card declined, and they have phoned me up at home when I have made a purchase online for the same reason.

Halifax VISA

Hmmnn...perhaps I best investigate a bit more then. I was under the impression that your credit limit was always very strict and that your transaction would be declined if you were to go over this.

Perhaps I should apply for a new "switch" type card tied to my old bank account. If I only leave £300 in the account then surely there's no way that the card could be used for purchases above that amount (I'll make sure there's no overdraft facility). Only problem is if I see a "buy it now" bargain on a Saturday/Sunday that's over £300. I guess I'd have to use another card for that one (not that you'd call many purchases over £300 a bargain!).

Thanks for letting me know about this Rigsby.

Is there any difference in the credit limits offered by Mastercard to Visa? I haven't noticed any, but maybe that's because I'm not a "heavy user".

I've also been getting alot of "you've been approved for a loan of £25K through the door. Don't know why though.

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I used to do this until I recently read that scum are using unopened pre-approved loan and credit card offers for the purposes of identity theft.

I do always tear things like this into lots of very small pieces before they go in the bin. MBNA have recently started sending me letters containing credit card cheques, which I've never asked for & don't want. I keep meaning to tell them to stop it, but haven't got round to it yet. With these cheques, or when throwing away an unexpired card, I usually cut them into about 4 pieces and put each piece into a different bin on different days, so the chances of anyone finding all the bits and piecing them together should be negligable.

If you think someone could have stolen your identity the easiest way to check is probably to request a copy of your credit file for £2 from credit reference agencies such as Equifax, Experian or Call Credit. This can be done online, eg;

Experian

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"I do always tear things like this into lots of very small pieces before they go in the bin. "

Buy a cross-cut shredder from Argos - £15.

Shred everything that has your name and address on it. Shred any corresponence from the bank. Make it a habit. There are 100,000 immigrants who would love your identity.

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Guest rigsby II

Perhaps I should apply for a new "switch" type card tied to my old bank account. If I only leave £300 in the account then surely there's no way that the card could be used for purchases above that amount (I'll make sure there's no overdraft facility).

I've also been getting alot of "you've been approved for a loan of £25K through the door. Don't know why though.

Yeah, take off the overdraft - or you will be liable for that too.

Everyone pi**ed of with junk mail should consider taking themselves off the mailing list - it does work - takes about 3 months

Remove Junk Mail

Edited by rigsby II

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If you want to pay online and not risk a large limit then cahoot do a virtual card. It can create a unique card number and limit, for a single one-off transaction.

Moneysavingexpert.com has details on how it all works..

(site seems down from work at the moment!)

Edited by kinesin

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Shred any corresponence from the bank. .

Except your bank statements, which you should file and keep for years! My partner is in a disagreement with his family about the purchase of property in 1997. They've claimed he didn't have the money to purchase as much of a share as he claims he did. Getting statements to prove their lies has turned out to be a nightmare!

:(

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I have an MBNA card with a £21k limit, and one with First Direct at £22k. I earn about £24k a year gross.

I don't owe anything on either card, but as an experiment I tried asking for a credit limit increase every 6 months or so just to see how far I could get them to go - its scary really just how much they will lend. I also got a letter from MBNA the other day saying the were offering me a "guaranteed" £10k loan without having to complete an application form, it went straight in the bin.

went straight in the bin?!???!!!!

I think you should think about using a cross cut shredder, otherwise you might just end up with that £10k loan afterall.

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went straight in the bin?!???!!!!

...not literally, I did rip it up first!

I used to live in a house with a solid fuel boiler which was great for destroying old credit cards, junkmail, bank letters etc. All were cremated with no risk of anyone being able to recover them, and it was quite satisfying to know all that crappy junk mail was helping to heat the radiators & hot water for free

<_<

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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