Card issuer Capital One have been strongly criticised for sending out unsolicited credit card cheques to an undisclosed number of customers, with debt campaign group Money Advice Scotland saying they plan to raise the matter with the Banking Code Standards Board (BCSB).

Although the letter accompanying the cheques contained a list of seven different ways the company recommended the cheques to be used, there was no mention of what level of interest this form of borrowing would attract.

The letter mentioned a 3% handling fee, but merely said that the interest would be charged at the account’s cash rate - without giving a figure. It transpires that this figure would be in the range of 25.94% to 34.94% depending on which of Capital One’s card offerings the customer had.

Yvonne Gallacher, chief executive of Money Advice Scotland, commented:

“I have real concerns about the tone. There is a real inducement to use the cheques and nothing about the fact that it will have to be paid back or how much it will cost.”

This isn’t the first time that Capital One have courted trouble with cheques - only last week the American-owned company was reprimanded by the BCSB over the sending out of cheques to 800,000 customers in 2005. The cheques had the cash amount pre-printed, in many cases for several hundred pounds, which the BCSB described as a serious failure of compliance. Around 20,000 customers used the cheques in question.

This entry was posted on Monday, November 13th, 2006 at 9:53 pm and is filed under General Credit Card News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.