Have you reached your limit?

CHANGING BANKS:Bank of Ireland says it is open for business but two readers who were forced to move their business from Halifax found not just a closed door, but an attitude straight out of the 1980s

‘WE’VE BEEN REVIEWING your account and as you are a such a valued customer we want to increase your credit card limit by €1,000. Good news! You’ve been pre-approved for a loan of €10,000. Need a holiday? Why not take one on us, with a €5,000 interest-free for six months loan. Fancy a bigger overdraft? Just call us now, no delays, no hassle.”

During the Celtic Tiger years, our banks threw money around with an abandon that an international playboy would have found unseemly. The financial institutions which were supposed to be models of fiscal responsibility couldn’t lend us cash fast enough. Credit card limits were increased, unprompted, four times a year; offers of substantial loans came through letter boxes almost as frequently, and mortgages of over 100 per cent were approved at the casual stroke of a pen by the most junior of bank officials.

Not any more. Today the banks have veered wildly in the other direction and are incredibly reluctant to part with what little cash they have left and some even appear to have travelled back in time to an era when women were expected to give up their jobs after marriage and go cap in hand to their husband each time they wanted a few bob.

The tightening of the purse strings was put into sharp relief with the closure of Halifax. When the bank announced it was pulling out of the Irish banking market earlier this year, it is estimated that 50,000 current account and 50,000 credit card customers were left with no option but to take their business elsewhere. While some have been able to move to other banks seamlessly, others have been left high and dry or treated in a manner which has left a bitter taste in their mouths.

A number of ex-Halifax customers have contacted Pricewatch in recent weeks with stories which reflect very poorly on our banks. One Halifax credit card-holding reader, who also had an account with Bank of Ireland for more than a quarter of a century, decided to join the dots and switch her credit card facility to that bank.

“I picked up an application for a Bank of Ireland credit card and sent it in without thinking too much about it,” she says. She owed nothing on her Halifax card, which had a credit limit of €2,000, so wasn’t looking to transfer any balance. Earlier this month, however, she got “a very cold letter from the bank” thanking her for her interest in a credit card “but telling me that I did not fulfil the criteria. The letter did not disclose the criteria.”

Fuming, she went into her branch to complain. “I had to make an appointment to see someone and when I eventually got to speak to him he rang the credit card section and was told I did not earn enough money.” She returned to the workforce on a part-time basis earlier this year and admits she does not earn a great deal – about €800 a month into her hand. She is debt free and also has some income from art – she is a painter – and together with her husband owns her own house.

This did not seem to sway the bank official and, in what might be considered a throwback to the distant past, he said the only way she could get a credit card – even one with a modest limit of €1,000 – was to get her husband to jointly take out the card with her.

“I said I have no intention of doing that and I don’t see why I should involve my husband in my credit card dealings. It is disgraceful that I have been made feel this wretched and insignificant by the bank. I was disgusted, horrified and obviously very upset and I will be taking my business elsewhere.”

Her story is not unique. Another reader, also forced to leave Halifax and his €10,000 credit card limit behind, went to Bank of Ireland where he had banked for over 20 years and where he had his first credit card. He also has a blemish-free credit history and earns over €60,000 a year, so he thought applying for a credit card would be straightforward. He was wrong.

“When I got my new Bank of Ireland card I saw I’d been allocated a paltry €1,500 credit limit, less than my first credit card with the same bank,” he says. His frustration was exacerbated by “the tedious complaints procedure”.

He said there was no available phone number nor e-mail contact to a relevant manager.

“Instead I had to post a letter of complaint to their consumer underwriting department. Eventually he received mail correspondence from the bank saying his credit limit had been increased to €4,000 although the letter was quick to point out that his original application had been through a “normal scoring system”.

“I have no faith in that scoring system. In the meantime, I’d applied to another bank for a card and had been approved, over the phone, for a €6,000 limit, with a promise of an increase in limit assessment within months if required,” he says.

“I have taken this card also despite the two stamp duties. I believe I’ve earned my right to secure a sensible credit limit that suits my needs and repayment abilities without having banks – who have displayed a breathtaking lack of prudence over the past decade – telling me what credit facilities I can secure.”

Bank of Ireland has run an extensive marketing campaign in recent months claiming it is business as usual despite the fact that it clearly is anything but. “We say ‘yes’ to 100 mortgage applicants daily,” proclaims its current home loans advertising campaign. Mortgage brokers disagree and many claim that the bank’s slogan is entirely divorced from reality and the bank has been accused of cherry-picking the customers it wants.

It may well be theoretically approving 100 mortgages every day but that does not mean it is lending to 100 people a day. It won’t say how many mortgages are drawn down on the grounds that the information is “competitively sensitive” but when Pricewatch published an estimate of just 40 mortgages a day including top-ups, remortgaging, mover-purchasers and investment mortgages the figure went unchallenged by the bank.

We contacted the bank in connection with our readers’ complaints but were told that it could not comment on individual cases. In a statement the bank said it was “open for business for credit cards” and that it reviewed “every application on an individual basis”.

The bank said that “generally speaking we look for the following from any applicant: good current account management and proof of permanent employment. Each application is reviewed on an individual basis and we strive to provide the limit that suits each customer’s need whether this is a low-limit student credit card or a higher limit Platinum Card.”

The statement went on to say that in line with the downturn in the economy and increased unemployment “we have seen some reduction in our approval rates but we continue to offer one of the best value range of credit cards and are open for business for all customers”.