Citizens Advice is calling for governments to end unsolicited rises in credit card borrowing limits.
Research by the charity found that credit card customers had their borrowing limits rise in the past year without notice from by their card provider, making those with debt more vulnerable.
“Rather than credit cardholders seeking to take on more debts, lenders are actively pushing it on people without enough consideration as to who can afford to pay and who can’t. Few consumers support unsolicited increases and our research shows that they make people’s debt problems worse,” said Gillian Guy, chief executive of Citizens Advice.
She hopes that the new budget that is set to be released next week will act in order to “prevent credit card companies weighing people down with unwanted debt – particularly when they are already struggling to keep their heads above water”
Consumer debt in the UK is on the rise – this year it reached £200 billion for the first time since 2008.
Citizens Advice found that credit card holders were given an average rise of £1,481 without being asked.
The government have started a formal enquiry into household debt. Providers have also agreed to follow voluntary codes of conduct set by the Financial Conduct Authority, who will set limits on borrowing limits.
Head of cards at UK Finance, Richard Koch, made clear that providers were “thoroughly committed” to the FCA’s codes of conduct.
“All our members undertake a thorough risk and affordability assessment of a customer’s finances whenever they apply for credit. This degree of rigour continues throughout the relationship, with ongoing monitoring of how the customer uses the credit product,” he said.
Labour announced proposals to limit rate charges on credit cards so that consumers do not have to pay back more than twice the amount of their credit card borrowings, helping those most vulnerable.