If you’ve got a credit card, as the majority of people in the UK have, you will be more than aware of how credit card companies are keen to increase the maximum credit limit on people’s cards on a regular basis, without being asked to do so.

Many individuals just want a credit card with a low limit, to be used for certain purchases and emergency situations, which can then be repaid quickly, without incurring large interest charges. However, credit card companies will then increase the limit on the card automatically, in many cases by several times the original limit.

These automatic increases are often too tempting to be ignored by borrowers, who have all of a sudden been given additional credit facilities, which they often use, getting themselves into debt which they probably wouldn’t have done if they had not been given the extra credit. This has raised concerns from the government who are now tightening the regulations which apply to credit cards.

Companies will not be allowed to automatically increase credit limits, unless the customer asks for this. Also, there has been a recent trend of companies sending unsolicited credit card cheques to customers, offering either zero per cent interest or a low rate for a period of time, these too are to be banned.

As a result, many borrowers are finding that their credit card company are actually now reducing their credit limits on cards, cutting off an important source of funding for many people. This course of action is likely to encourage more people to apply for a debt consolidation loan, so that they can use the funds from the loan to repay all their outstanding credit card balances.

This is all well and good, but as personal loans of any kind are becoming harder to obtain, many individuals with a less than perfect credit rating may find themselves being rejected for a loan and also having their credit card limits reduced, forcing them to focus seriously on their finances going forward, which for many probably won’t be a bad thing!