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Pay close interest to offers to raise credit card limits.

DO YOU read the mail that comes every day from your credit card company? If not you might be surprised to find that it's possible it could contain a letter offering you money in the form of an increase to your credit limit.

According to the latest research conducted for Scottish debt advice and solutions provider Debt Advisory Centre Scotland, 50 per cent of Scottish credit card customers have received an unsolicited offer of increased credit during the last 12 months.

Of these, two-thirds accepted the offer from their lender.

Eighteen to 24 year-olds with credit cards were the most likely to be offered a higher limit, even if they did not ask for one, and most likely to accept such an offer. Two-thirds of this age group received such an offer, compared to a third of over 55-year-olds.

Lenders are duty bound to ask their customers whether they would like their credit limit to be extended rather than doing it automatically, but borrowers do not have to agree.

And of course it goes without saying that an offer to increase your credit limit doesn't necessarily mean that you need to go out and spend up to your new limit.

The increases are usually computer generated and although they often seem to arrive just as you think you need to go and spend the extra money you seem to be being given, it's purely coincidental.

Ian Williams, spokesman for Debt Advisory Centre Scotland, said: "The practice of lenders offering to increase their customers' credit limits presents something of a Catch 22 to borrowers.

"Those who rarely max out their cards are unlikely to need a higher limit, while those who do and then struggle to repay it may be in a position where it is unwise to borrow more. And yet, of the half of Scottish credit card holders offered a higher credit limit, two-thirds have accepted it.

However, they should do so with caution as borrowing more can mean the balance takes longer to repay, and customers end up paying more interest long-term."

CAPTION(S):

CAUTION Consumers are not obliged to accept rises in credit limits

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Title Annotation:Features
Publication:Daily Record (Glasgow, Scotland)
Date:Dec 19, 2014
Words:357
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