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Credit Card Rates Hiked By Two Major Providers

admin — Tue, 29 Sep 2009 07:50:39 +0000

Two major credit card providers have become the latest to hike up their credit card interest rates, despite the fact that the base interest rate in the UK is at its lowest level in the three hundred and fifteen year history of the Bank of England. Officials claim that the two card providers have sneakily hiked up the interest being charged on credit card borrowing by significant levels, thus increasing borrowing costs for their cardholders.

The two banks that are said to have pushed up their credit card interest rates recently are Halifax and Bank of Scotland. Officials have expressed concern that whilst the Bank of England has been slashing the base interest rate over the past six months, bringing it down to an all time low of just 0.5 percent, some credit card firms have continued to hike up their interest rates dramatically.

The two groups are owned by HBOS, which has now been taken over by Lloyds TSB. The provider has said that the rate rises are between 1 and 4 percent. However, some of the credit card customers have received letters stating that their card interest rate is being increased by 5 percent. Some customers have even seen their rates increased by more than this amount. The card provider has said, however, that the move is part of a ‘continual review of rates’.

An official from HBOS said: “The changes will affect a small number of our card holders and will be according to each customer’s personal circumstances. The average increase is between 1% and 4% which is inside [government] guidelines and reflects what is happening across the credit card market.”

Tags: providers, interest rate, bank of scotland, borrowing, halifax

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Credit Card Firms Will Have To Do More To Assist Borrowers

admin — Wed, 14 Jan 2009 20:54:27 +0000

Following a recent meeting with the Business Secretary Lord Mandelson, officials from the credit card industry have pledged to try and assist struggling borrowers more through the deployment of a number of measures. Over recent weeks credit cards have hit the financial headlines a number of times, namely because of the high rate of interest charged on borrowing despite the aggressive base rate cuts, and because of increases in various other related fees and charges.

The high cost of borrowing on credit cards has even captured the attention of the Prime Minister, Gordon Brown, who has intervened and stated that credit card firms have to stop fleecing consumers and start treating them more fairly, particularly in the current financial climate. The base interest rate has been slashed to just 2 percent over the past few months, but officials state that interest rates on credit cards has been rising over that period.

Part of the meeting with Lord Mandelson focussed on the use of risk based interest rates, which would be set according to the likelihood of the borrower defaulting on repayments on the debt. Credit card companies have also agreed that they will wait at least thirty days before starting any debt collection proceedings providing the borrower is working with a debt advice official in order to try and find a solution towards making repayments on the debt.

Consumer Affairs Minister Gareth Thomas stated: “The government is deeply concerned that borrowers aren’t getting a fair deal. That’s why we’ve taken swift action to bring the industry in to look at how costs are being applied to people’s existing debts.”

Consumers Should Fight Credit Card Increases
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Tags: interest rate, consumer, consumer affairs, Credit Cards, borrowing

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Consumers Should Fight Credit Card Increases

admin — Mon, 12 Jan 2009 19:12:05 +0000

Consumers are being urged to bear in mind that hikes on credit card interest can be fought if the credit card company appears to have put up the rate on the card for no apparent reason. Many credit card companies have been increasing both the interest rate and the charges on their credit cards, and this is despite the fact that the base rate has fallen by almost two thirds since the end of last year. This has caused concern amongst campaigners, consumers, and even the Prime Minister, Gordon Brown, who has been trying to address the issue.

Borrowers who find that their credit card providers suddenly increase the interest rate on the card should contact the lender to find out why the rate has been hiked up. If the borrower has a good credit and repayment history there should be no reason why the card company would increase the rate at the current time when the base rate is actually falling, and customers need to ensure that they find out just why the card company has increased the rate, as there is a good chance that the consumer can get the rate reverted back to its original level.

Official from the Financial Ombudsman Service have said that when credit card firms have been unable to justify rate increases they have been forced to reduce the rate back down to its original level. One official from the service said: ‘This is something we are starting to see increasingly more of. What we would want to see is an individual risk assessment of that customer, not some vague statement as to why lending money is more dangerous. Firms are frequently unable to produce this.’

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Tags: base rate, interest rate, financial ombudsman service, good credit, Credit Cards

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Credit Cards Costing More

admin — Mon, 15 Dec 2008 19:27:47 +0000

Credit Card companies are going against government warnings to make their credit card deals fairer to customers and face investigations by industry watchdogs if do not change their ways.

Despite there being three interest rate cuts to the Bank of England base rate, following an analysis carried out by the Independant, it looks like people are now paying more now than what they would have 12 months ago with interest rates now at 17.7% compared with 16.6%.

Lord Mandelson has given providers two weeks to help their customers with ways of managing their debts which was a topic discussed at a summit back in November. By Thursday the government is expecting providers to come back to them with how they intend to go about this and failure to do so may end in further investigation by the Office of Fair Trading.

Lib Dems Treasury Spokesman Vince Cable said “The Government has got to get tough with credit card companies determined to make a quick buck out the millions of people struggling to make ends meet. Tough words are worthless unless they are backed up with real action.”

On the Conservative side, business spokesman Alan Duncan said “The Government’s policy after the banks’ bailout has clearly not reached the credit card sector. It has done nothing to clamp down on credit card ownership – particularly by the most vulnerable people.”

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Tags: credit card, Conservative side, office of fair trading, bank of england, store cards, interest rate

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Lenders To Ignore The Drop

admin — Mon, 10 Nov 2008 20:56:22 +0000

While millions of home owners will be benefiting from the recent 1.5% rate cut, credit card holders look unlikely to expect there repayments to fall. According to financial data firm Moneyfacts although the Bank of England have dropped interest rates to 3% they can expect to pay the average APR% which is around 5 times that figure.

Spokes woman for Moneyfacts, Michelle Slade said “I doubt we will see lenders cutting rates on credit cards, usually lenders only cut rates to attract customers.”

She advises that the only lender to offer cards linked to the base rate is the Co-operative Bank which will see holders of Gold and Platinum credit cards gaining from a 1.5% interest rate drop although with the Gold card having a £120.00 annual fee the interest rate will be around 19.4%.

Mortgages that the Co-operative Bank offered via Northern Rock and Yorkshire Building Society the cut passed on.

On the other hand the largest credit card provider, Barclaycard, has advised that it would not be be changing their interest rate (14.9%) due to the recent drops and a spokesman says “The primary factor in our pricing is risk, not the cost of money, so the cut will not have an immediate effect.”

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Tags: interest rate, platinum credit cards, Credit Cards, northern rock, yorkshire building society

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Declined Applications For Financial Products

admin — Sun, 19 Oct 2008 11:02:05 +0000

According to research carried out by MoneyExpert.com, around 5 million applications for new credit cards and loans have been rejected by lenders over the last six months. The figures work out that about 56 % of the population of the U.K has applied for such financial products in the last six months.

Of this number 13% have been rejected for credit card applications and a further 6% rejected for unsecured loans. For the people who have luckily been accepted for cards they have seen their application being approved but at a much high rate than they would have saw 18 months ago.

The most likely people to get rejected are people who fall into the age bracket of 25 to 34 which has saw a ratio of about 1 in every 5 people being rejected for a credit card and 1 in every 10 failing to get a loan in the last six months.

The Director of MoneyExpert.com, Sean Gardner, said ” The banking crisis means lenders are terrified to lend to almost anyone.”

” They are battening down the hatches and focusing on getting as much money back as possible. In the current climate lenders are tightening up on already tightened rules for new applications.”

” Anyone whose credit record is even remotely suspect risks rejection. Banks want to recover their bad debts and they don’t want to create more of the same.”

He also added ” It makes sense for lenders – and even borrowers – to reject applications from people with debt problems or who have already made multiple applications.”

” People who know they don’t have a perfect credit record shouldn’t apply for the top products. Lenders just won’t accept your application, particularly in the current climate. Make sure you apply for a product that is suitable for you and that you only try to borrow what you can afford to repay.”

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