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Last Updated: Saturday, 11 February 2006, 14:46 GMT
Concern over pensioner debt
By Bob Howard
BBC Radio 4's Money Box

A past due stamp
When a person dies debts can be taken from the estate

Some credit card companies are setting pensioners' credit limits three times above the average even if they only make minimum repayments.

This discovery by BBC Radio 4's Money Box programme comes soon after one debt advice agency revealed that - amongst its clients - debt is rising fastest for women over 60.

When someone dies, credit card companies have the right to reclaim any debts from that person's estate.

This has led Susan Kramer MP to question whether card companies are considering elderly customers' assets before setting their limits.

The banking industry denies this is the case.

BBC Radio 4 was contacted by Jan Watson, who was dealing with her late aunt's affairs. She was shocked to find her aunt owed 26,000 on four different credit cards.

I think it's morally unjustifiable and I think it's wrong
Ms Watson
Ms Watson is angry her aunt was allowed to accumulate such a large amount of debt even though she only had a part-time job and a small pension.

"My aunt was a pensioner. She didn't have an income which warranted that amount of credit. I think it's morally unjustifiable and I think it's wrong," she told the programme.

When her aunt died, Ms Watson discovered that although the debts were unsecured, the lenders could reclaim the money from her aunt's estate, and intended to do so.

Lending criteria

It is not always easy to understand on what basis banks set or raise credit limits on their cards.

Capital One - one of the cards Ms Watson's aunt used - said it uses credit scoring and considers how well an account is managed as part of its criteria for setting limits.

The three other cards were with Barclaycard, which admitted Ms Watson's aunt had an unusually high credit limit, but added that she had an impeccable payment history.

Barclaycard told the programme the average it allows a customer to spend on a single card is around 3,000.

Are the banks looking at people who are older and saying they've got assets?
Susan Kramer MP
But Jan's aunt was authorised to spend a total of 20,000 across her three cards.

Ms Watson's MP, Susan Kramer, said the banks must clarify the criteria they are using to set limits: "Are the banks looking at people who are older and saying they've got assets, when they unfortunately do pass away we'll be able to get our hands on that asset and get the debt paid back?"

In response, the banking industry told the programme it is revising its code on some lending, but not on the setting or raising of credit card limits.

Sandra Quinn of Apacs, speaks for banks on credit card issues.

She told the programme: "I think it's unrealistic to say banks are assessing customers on the ability that they're likely to die at some stage in the future and banks would have a claim against their home. Banks do not assess credit in that way."

BBC Radio 4's Money Box was broadcast on Saturday, 11 February, 2006, at 1204 GMT.

The programme was repeated on Sunday, 12 February, 2006, at 2102 GMT.

Money Box



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