The government is planning to ban the credit card industry practice of upping customers’ credit limits without a account holder request. Ministers also want to ban the unsolicited issuing of credit card cheques.
These moves are apparently intended to stop consumers running up huge card debts by reducing the temptation to spend.
The words ‘horse’, ’stable’ and ‘door’ spring to mind…
Around three million Barclaycard customers will see their card’s APR cut by between 2.5% and 5%, with an acknowledgment from the company that many people were facing difficult times. The lucky 3m will be the card provider’s lowest risk customers - a further 9m Barclaycard holders will not see any change.
Critics have pointed out that the credit card industry has thus far not passed on the reductions in the Bank of England Base Rate, but card issuers say that in this economy there is an increased risk of people defaulting, which has meant they have to keep average APRs high to cover the costs of bad debt.
It remains to be seen whether other card issuers follow Barclaycard’s lead - it would appear that egg plc certainly aren’t.
Some carriers of the Egg visa card have been hit with a swingeing hike in the APR of their card, with new rates of 26.9% reported on accounts that used to feature rates closer to 20%. This type of rate increase may seem strange in an age of plummeting interest rates, yet the true purpose of the hike is revealed later in the communication from the bank.
If consumers act quickly, they could be in line to make a saving of up to £400 over Christmas and during the January Sales.
Politicians and consumer groups have expressed anger and outrage at high street stores which are accepting ‘credit vouchers’ which are repaid by borrowers at an annual percentage rate (APR) of 222%. This is a rate more than 10 times higher than a typical credit card.
Thousands of credit card customers have been dismayed to find that the APR charged on their accounts has been suddenly raised, in some cases to beyond the 30% mark. Chief culprit appears to be MBNA who have even hit customers with a whopping 34.9% APR, even when the customer claims to have had no problems with their account and no history of late payments or defaults.
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Low-risk credit card holders are facing fees, credit limit cuts or even account closure as credit companies seek to cut costs and increase revenue.
Police have issued a warning about a new scam which targets personal and business credit card holders.
The alert was broadcast after a business owner from Chester was contacted by telephone by a person who claimed to be a representative of the Cheshire Police press office. The caller proceeded to demand payment by credit card for advertisements in a police publication.
Despite the recent fiasco over the ditching of 160,000 loyal customers, and the resulting bad press, Egg remains one of the most widely recognised credit card brands in the UK today. Even though nowadays it’s offering is less than spectacular, it is still a fairly popular card - in no small part to the widespread publicity it has received over the years just because of its name. After all, what blogger or journalist can resist showing off their writing prowess by producing a teeth-grindingly awful pun as the headline?
The Office of Fair Trading (OFT) has again criticised card card issuers for making their products too complicated and hard to compare. The chief complaint was that the way a card’s APR was calculated was done in 12 different ways among the top 20 card providers, effectively making APR meaningless as a comparison point when choosing a new card.