Were Your Credit Limit Increases Unaffordable?
Credit limit increases are not just a feature of an existing account — they are a fresh affordability event. Each time a credit card or catalogue lender raises your limit, the lender has to consider, again, whether the new higher facility is affordable. Where lenders increased limits with no real check, or in the face of obvious distress, those increases are often the strongest part of an unaffordable lending complaint.
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The legal position
CONC 5.2A applies to any “significant increase” in the amount of credit or in a credit limit, not just to the original credit decision. The FCA’s rules require a fresh creditworthiness assessment that is reasonable and proportionate, and that takes account of the customer’s position at the time of the increase. The duty does not relax over time; if anything, it sharpens, because by the point of an increase the lender has its own data on how the existing credit is being used.
For credit cards specifically, CONC 6.7.18R requires that limit increases must not be made where the lender has reason to believe that the customer would be unable to meet repayments under the increased limit. There are also rules requiring lenders to give the customer a clear opportunity to decline an unsolicited increase.
What counts as an increase that should have been checked
In FOS’s practice, the kinds of limit increases most often found unaffordable are:
- Automated, unsolicited increases — based on the lender’s internal scoring rather than fresh income or expenditure data, despite signs of strain on the account.
- Increases on accounts in persistent debt — where the customer was only ever making minimum payments and the balance was not reducing.
- Increases following obvious distress signals — late payments, returned direct debits, cash advances at high frequency, balance running constantly at or near limit.
- Multiple successive increases — where the limit doubled, tripled or more over a short period without ever being meaningfully re-checked.
- Increases despite known external problems — recent defaults on other accounts visible on the credit file, payday loans active, an existing CCJ.
Each increase is a separate event
For time-limit purposes and for the substantive analysis, each limit increase is treated as a separate event. A complaint can succeed in respect of some increases (typically the later ones, where strain had built up) while failing in respect of earlier ones where the lender’s position was reasonable.
This matters in practice because:
- A complaint can run against a card opened many years ago provided more recent increases are within the FOS time limits.
- Redress is calculated only in respect of increases that were unaffordable, not the whole account.
- Account history showing the sequence of increases — when, by how much, and what was happening at the time — is the key evidence.
Catalogue credit limit increases
Catalogue accounts are particularly prone to limit-increase issues. Many catalogue lenders raise limits automatically based on payment performance, and the resulting limits can grow well beyond what the customer’s actual income and expenditure could sustainably support. Because catalogue customers often have thinner credit files or lower incomes to begin with, the proportionality of any increase is especially important.
Credit card limit increases
For credit cards, the limit-increase question often interacts with the persistent debt rules. A customer in persistent debt for 18+ months should be receiving prompts to increase repayments, not offers of more credit. Where a lender raised the limit on an account that was already triggering persistent debt monitoring, that combination tends to produce strong complaints.
What is persistent debt — credit card claims.
What the redress looks like
Where a limit increase is found to have been unaffordable, the typical redress is:
- A refund of interest and charges that accrued on the portion of the balance that was above the previous (affordable) limit.
- 8% statutory interest on top.
- Removal of adverse credit-file entries linked to the unaffordable portion.
- Where the account remains open, a re-set of the limit to the last affordable level.
Related guides
- What is persistent debt — credit card claims
- What affordability checks should a lender carry out?
- The CONC rules on affordability — a plain-English guide
- Do I have an unaffordable lending claim?
- How redress is calculated
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