Virgin Money crackdown on credit cards since Brexit vote

Virgin Money has tightened its requirements for customers applying for a credit card since the EU referendum vote, following a 41% increase in debt compared to last year.

The company outlined the change on Tuesday in a trading update, which showed that credit card holders had already amassed £2.2bn worth of debt on their accounts by the end of September this year.

That figure is compared to a total of £1.6bn accrued throughout the whole of 2015 - an increase of 41%.

In response, Virgin Money have tightened their credit score requirements for those applying for credit cards in order to "protect the credit quality of new credit card lending".

The business particularly noted that the move has been necessary since the EU referendum results were announced in June, but it has also said that it does not expect a "material adverse impact" on its business as a result of the vote.

The rise in debt among credit card holders could be a result of poor savings returns thanks to the lowering of the interest rates.

The Bank of England dropped rates to record lows of 0.25% in August in response to the economic uncertainty following the Brexit vote.

Many high street banks followed suit and cut interest rates on savings accounts, often to zero, meaning customers aren't getting any benefits from the savings.

This could make taking out a credit card seem like a more attractive option, as holding on to money becomes less lucrative and credit companies offer ever-increasing perks for card holders, such as air miles.

The increase could, however, also be due to an uptick in the number of customers.

Virgin Money has seen its business share grow in recent years, and more customers taking up a credit card would result in the amount of debt held on accounts overall also increasing.

Commenting on the overall results, Virgin Money chief executive officer Jayne-Anne Gadhia said: "I am delighted with the continued strong performance of the business in the third quarter of 2016.

"We have been encouraged by the relative strength of the UK economy immediately following the EU referendum result although we continue to look forward with caution.

"We are well placed to manage potential economic headwinds and remain confident of achieving a solid double-digit return on tangible equity for 2017."