Don’t be frivolous with your credit card

Credit cards are something of a double edged sword to most people. On one hand they are able to help people out of money problems, providing a financial lifeline and helping them when they have severe cash flow problems. On the other hand they are the essence of temptation and can lead people into spiralling levels of debt that can result in financial disaster.

Many industry experts have urged consumers to learn how to use credit cards properly. There are many ways in which you can benefit from credit cards, such as being able to enjoy the convenience and ease of avoiding carrying cash, being able to pay for larger items and then repay the balance gradually, and being able to tide themselves over during difficult times.

However, there are many people that take out a credit card simply because they want to spend unnecessarily rather than for the convenience, ease, and flexibility that these cards offer. Many people that are approved for a credit card will go out of their way to spend on it and often buy things that they do not particularly want or need simply because they are able to do this.

This frivolous spending is partly what has landed the country in huge levels of personal debt, with consumers taking out loans and credit cards to buy all sorts of luxuries, pay for holidays that they cannot really afford, buy the latest gadgets and high tech devices at high prices, and even using their new found ‘wealth’ to treat other people to things. For many having a credit card only involves looking at how much they have to spend rather than how they will repay the money and how much they will have to pay because of interest.

A recent report has shown how many people that apply for credit cards are more concerned about how much money they will get in terms of their credit limit than how much they will be charged in interest. This is because so many people are planning to use their credit cards to spend, spend, spend, rather than use what they need to and then get it cleared quickly and at a low rate of interest. Many people spend on their cards needlessly even when they are paying high rates of interest, which is something that can quickly lead to spiralling debt levels that become impossible to manage.

Tags: sword, Credit card, luxuries, Credit Cards, low rate, financial disaster, frivolous spending, consumer

Make 2011 the time to get a better credit card deal

Whilst many people in the UK are on poor credit card deals, with high rates of interest and little to nothing in the way of benefits, many fail to take any action such as switching to a more favourable credit card. However, with 2011 almost upon us now could be the time to act, and by doing this cardholders could enjoy far greater benefits or could enjoy paying far less – or even nothing – in interest.

At the start of 2011 new regulations will come in, which will see credit card providers having to make a number of changes to the way in which they operate in order to benefit consumers. This will include a new minimum payment system, which will ensure that cardholders are not left festering in debt indefinitely because of minimum repayments, and more importantly the need for card providers to apply repayments to more expensive debt rather than the cheapest debt, which could save consumers a small fortune in interest.

However, there are fears that these changes, which are due to come in soon, could result in credit card provider trying to bring in sneaky new charges and increase interest rates in order to recoup their losses, and some credit card holders could find themselves paying even more for their borrowing as a result of this.

Rather than just putting up with the way that credit card providers decide to change the account many cardholders could find that they can benefit hugely in terms of their finances by taking the time to find a more competitive deal on their credit card, which will help them to start the New Year in the way that they mean to go on – with streamlined finances and in a better financial position.

Whilst credit cards are not as easy to get as they once were, prior to the onset of the global financial crisis, it is possible to get a good deal on a credit card if you have a decent credit rating. The easiest way to do this is to get online and find a credit card that suits your needs, but which offers far better value for money than your existing card. You can then save money on the amount of interest that you pay, or if you do not tend to spread your repayments you could even opt for a rewards based credit card.

Tags: Credit Cards, increase, Business Finance, number, amount

Figures show fall in credit card fraud

Recent figures have shown that the level of credit card fraud seen in the UK during the first half of this year fell. In fact, according to recently released figures the level of fraud fell to its lowest level in ten years. Officials believe that a number of factors have contributed to the drop in credit card fraud levels.

During the first six months of this year the value of losses caused by credit card fraud came to around £186.8 million. Compared to the first six months of last year this reflected an impressive drop of 20 percent. According to the UK Cards Association the drop in credit card fraud is down to a number of security initiatives.

Amongst the security initiatives that were highlighted by the UK Cards Association as being partly responsible for the drop in credit card fraud was the increased rollout of updated chip cards across the UK as well as raising awareness amongst retailers over how they could increase protection against fraud on their chip and pin machines.

Cardholders and retailers are also said to be signing up more for security measures such as Verified by Visa and MasterCard SecureCode, which helps to protect cardholders from fraudulent activity.

Further good news was that the level of online fraud had fallen, with more people now aware of things such as phishing scams and protecting accounts more effectively in terms of passwords. Online banking fraud losses are said to have enjoyed an impressive 36 percent fall in the first six months of this year compared to the first six months of last year.

Melanie Johnson, Chair of The UK Cards Association, said: “These figures are testament to the importance that the UK’s card companies place on driving down card fraud losses and reducing any inconvenience to customers.”

Tags: credit card fraud, UK Cards Association, fraud, banking fraud, Association, Visa, Credit Cards

Millions have a year or more of debt on their cards

It has been reported that millions of borrowers in the UK have outstanding credit card debts of a year or more, with many only managing minimum repayments on their debts in the current outstanding climate. According to the report more than six million people have had an outstanding balance on their credit cards for at least a year.

Research was carried out by moneysupermarket.com, and officials from the firm claim that almost 10 percent of people admitted to paying only the minimum amount off on their credit card debts each month. This has resulted in 14 percent of cardholders having debt on their credit cards for over five years, with the minimum repayments barely covering the interest on their debt.

Industry officials have warned that those paying off their debts with just the minimum repayment each month will not only spend years longer repaying the debt but will also pay a huge amount in interest over the term of the debt. However, in the current financial climate following the credit crisis and recession many cannot afford to pay any more than the minimum.

The average length of time that a balance is left outstanding on a credit card according to the survey results is twenty one months, and officials want to ensure that consumers understand the repayment structure and the consequences of minimum repayments.

An official from Moneysupermarket.com said: ‘Our research reveals credit cards are still playing an important role in the nation’s finances, but in the current climate, it’s more important than ever for consumers to understand the cheapest way to borrow on their cards and avoid getting stung by high interest rates. The most important thing is that consumers understand the implications of borrowing on a credit card and that paying back the minimum amount each month will dramatically increase the total amount they pay back in the long run.’

Tags: Moneysupermarket.com, Credit card, debt, credit, cheapest way, outstanding credit card, Credit Cards

Credit card debts soaring amongst pensioners

It has been reported recently that credit card debt amongst pensioners has been soaring, with struggling pensioners sitting on £1.1 billion worth of credit card debt. Financial problems amongst many pensioners have increased as a result of soaring inflation coupled with minimal rates of interest being paid on their life savings.

Figures were released recently by Gfk NOP and showed that pensioners were no spending a fortune collectively on their credit cards each month, with pensioners’ credit card spending values rising by 20 percent since the start of this year. June saw pensioners spend an average of £354 each on their credit cards. The last time this level of spending was reached was at the height of the credit crunch in October 2008.

The total outstanding debt level for June amongst credit card pensioners was £1.1 billion, and this reflect an increase from £900 million from six months earlier. With many pensioners being hit with the rise in the cost of living coupled with the drop in savings interest rates many have had to turn to their credit cards to fund their essential spending, and this has seen the level of credit card debt rocket amongst older people. Many also have additional debts to deal with such as loans and finance, and a recent survey showed that one fifth of those aged fifty five and over still had a mortgage to pay off.

Joanna Parsley, a spokesperson for the consumer group Credit Action, said that older people were in a very vulnerable position, stating: ‘The growing indebtedness of older people is scary. We are talking about a generation who are particularly vulnerable as the income from their savings has been devastated.’

Tags: credit card debt, finance, Social Issues, debt level, Credit Cards, debt, fifth, month

MBNA credit card can be activated online

The Internet has had a huge impact on the lives of most consumers, and being able to access goods and services online has improved convenience and ease for many people that prefer this channel to alternatives such as using the phone or having to go out to access various services.

It has now been revealed that credit card giant MBNA has tapped into the enthusiasm of consumers to be able to access services online wherever possible, and has taken action that will enable cardholders to activate their cards online, which will make things faster, easier, and more convenient for many people that have internet access.

This will be the first time that customers in UK and Ireland will have a choice of options when it comes to activating their MBNA credit cards even if they are new. Previously the cards could be activated online but only if they were replacement cards. However, this channel will now also be available to those that have new MBNA credit cards.

An official from the firm said that the majority of new accountholders actually applied for their credit cards online, and therefore it was only natural that these people would prefer to activate their cards online, access their accounts online, and manage their credit cards online.

Ian Craig, customer service and channel fulfilment executive for Bank of America Europe Card Services, said: “Our customers tell us they want more online options to service their accounts so it makes sense to open up online activation to everyone. The majority of our new accounts are applied for online; so, for many, it is the right channel to offer more. We’ve expanded the scope to activate our cards as it’s quite right that we offer them the freedom to service their account via their channel of choice.”

Tags: channel, online activation, MBNA, accounts online, online, america, internet access

Further increase expected with credit card interest rates

Over recent years there has been a lot of controversy with regards to the high rate of interest that is charged on many credit cards, with campaigners, consumers, and various other officials pointing out that the gap between the base interest rate – which is at its lowest level on record at just 0.5 percent – and the average credit card interest rate was getting wider and wider.

Whilst the base rate has been at its all time low for well over a year now credit card interest rates have continued to increase, leaving many credit card customers who are unable to settle their balances in full at the end of each month facing very high levels of interest on their debts. However, despite the controversy it appears that the problem could be set to get worse.

According to reports experts from the credit card industry are predicting that credit card companies are set to increase credit card interest rates even further, and this could further impact on the finances of many people that are already struggling to stay afloat. Experts believe that credit card providers will increase their rates in order to offset the risks that they are having to take.

Recent research showed that over five million consumers in the UK had admitted to using their credit cards on a regular basis to make bill payments and other essential payments, and this means that the higher interest rates could take their toll on many people.

A spokesperson from Moneyfacts.co.uk said: “Providers have been putting rates up and obviously there’s high unemployment and the risk of people defaulting and not repaying their debts is still quite high, so they’re very strict on who they give their cards to. The customers that pay off just the minimum every month are going to be the ones who are hit hardest. They’re going to add, maybe, hundreds of pounds extra on to their debt and take a lot longer to repay [it].”

Tags: personal finance, interest, risk, increase, rate of interest, credit card interest rates, Credit card, Credit Cards

Consumers can benefit from rewards based credit cards

One popular finance website has recently highlighted the benefits of rewards based credit cards, stating that many consumers could benefit from having these credit cards providing they use them properly. Officials from the site, Confused.com, said that in the current climate many people could benefit from effectively being able to get something for nothing.

With rewards based credit cards consumers are able to earn points, rewards, or cash back when they make purchases on the card, and there are various different rewards based credit cards to choose from offering a choice of different rewards. Some of the rewards available with these credit cards include air miles, points towards discounts, vouchers, and more, as well as cash back.

Those that use these credit cards need to ensure that they clear the balance in full each month otherwise the interest that they pay on their balance could by far outweigh the rewards that they earn for making purchases on the card. However, by repaying the balance in full each month no interest is charges and customers can effectively get something for nothing by earning their rewards.

The level of rewards offered on these cards can vary depending on the card and provider that you go through, and rewards can only be earned by making purchases on the card and not for cash transactions and withdrawals.

A Confused.com official said: “Using a reward based credit card can be a great way to earn incentives like cash back, flights and shopping vouchers.  Our findings show that it is still possible to get something for nothing and that savvy shoppers really can be rewarded for using a credit card, with incentives that all the family can benefit from.  Customers who are able to pay off their balance in full each month are likely to benefit the most from a reward card, otherwise the benefits could be outweighed by interest charges.  For customers who find it harder to do this, a zero percent purchase card may offer a more suitable and beneficial proposition.”

Tags: Credit card cashback, interest, rewards, Credit Cards, points

Credit card fraud increases

The flexibility and ease that credit cards provide have made them hugely popular amongst consumers in the UK, and many people now have one or more credit cards, which they use for making purchases on the High Street, by phone, and online. However, whilst these cards do offer the ultimate in freedom and flexibility they can also pose a danger if users are not vigilant.

Credit card users are being warned that they need to be more vigilant when using their credit cards and with their credit card information. This is because figures have shown that the level of credit card fraud has increased, with 6.4 percent of plastic cardholder falling victim to fraud in the past twelve months compared to 4.7 percent in the previous year.

The figures were released as part of the British Crime Survey, and the rising level of card fraud has made many people concerned about falling victim to this type of activity. In a survey 53 percent of cardholders said that they were concerned about becoming a victim of plastic card fraud.

With fraudsters now using a range of sophisticated methods to conduct this type of criminal activity, cardholders are being urged to be extra vigilant when using their credit and debit cards. It is also advisable for cardholders to check their statements carefully and also check copies of their credit reports in order to look out or any suspicious transactions.

One credit card holder stated: “I used to do a lot of shopping online with my credit card, and I’ve never been a victim of fraud. However, these days I often think twice about shopping in this way because the level of card crime in the UK really worries me. I think it is vital that shoppers are really careful when they use their cards.”

Tags: Credit Cards, Visa Inc., credit card holder, plastic, flexibility

Banks make the switch from Maestro

It has been reported that a number of UK banking giants are working towards replacing their Maestro payment cards to alternative such as Mastercard and Visa payment cards. Read more

Tags: switch, MasterCard, Debit cards, personal finance, Credit Cards, Visa

Banks urged to provide services to those that are excluded

A group consisting of charities and local groups is urging banks to extend their services to those that are currently excluded from a wide range of banking services, such as current accounts, basic bank accounts, credit cards, loans, and overdrafts. Read more

Tags: interest rates, Credit card, Payday loan, priority, Credit Cards, overdraft, quarter

Cash back cards set to become scarce

Over the years many consumers in the UK have taken advantage of cash back credit cards, and these are a type of reward credit card that enable consumers to earn a set level of cash back on every pound that they spend on the card on purchases. Read more

Tags: rewards credit cards, reward schemes, personal finance, figures 25 percent, pound

Credit card companies to start targeting high earners again

Whilst there has been something of a credit boom in the UK over the past decade, prior to this boom it was not unusual for credit card firms to focus only on wealthy, higher earners, leaving those on lower incomes out in the cold when it came to getting credit. In fact, seeing someone open a purse or wallet with a string of credit cards suggested that the person was well off and earned good money. Read more

Tags: Sandra Quinn, Debit card, Credit history, Credit Cards, interest rates, Payment systems, credit, PricewaterhouseCoopers

Making your money go further over the festive season

In years gone by Christmas usually referred to just one day, which was of course Christmas day, and whilst preparations for the big day were made in the run up to Christmas it was not like it is today, where the two weeks leading up to Christmas were filled with festive events and parties and the week between Christmas and New Year was also filled with events and festivities that often usually cost money. Read more

Tags: Christmas spending, lucky ones, save you, trimmings, finances, Credit Cards, festive budget, interest rates

Shoppers need to look around for best credit card deals

Consumers in the UK are being advised by industry experts to make sure that they shop around for the best credit card deals, as many credit card providers are now offering a range of perks and benefits that could see consumers getting far better value for money on their spending. Read more

Tags: credit card deals, business, personal finance, Christmas period, Credit Cards

Consumers should shop around for Christmas credit cards

With the festive season almost upon us once again many people will be looking around at credit card deals so that they have the credit that they need to make their purchases for Christmas. Read more

Tags: Daskaloff credit card rating system, purchases, Credit Cards, consumer, repayment, christmas credit cards

Credit card firms try to woo back customers

Over the past couple of years credit card firms in the UK have been turning away an increasing number of clients, with the global credit crunch seriously affecting lending levels and leaving many people with little to no chance of getting credit. Read more

Tags: cash back credit cards, reward credit cards, cash back rewards, United States, period, Credit Cards

Credit card charges could be increased by banks

Over the past eight months the base interest rate in the UK has remained at an all time low of just 0.5 percent, with the Bank of England announcing only last week that the base rate was to remain at this record low for yet another month. Read more

Tags: write-off, card borrowers, credit card fees, credit card charges, record, order, Credit Cards

Store card customers to be penalised for being in credit

These days more and more people are wary of spending too much on credit, and this is why so many people have decided to cut back on spending on their credit and debit cards, which is a sensible decision given the mounting levels of personal debt in the UK. Read more

Tags: house of fraser, debts, mothercare, GBP, Credit Cards, store cards, plastic

Further limit reductions on credit cards could be in the pipeline

It has been claimed in a recent report that a growing number of credit card customers in the UK could see their credit limits reduced as credit card providers do their best to shore up their finances and claw back some revenue. Read more

Tags: bank, mention, interest, result, credit card limits, United Kingdom, credit, Credit Cards

Cardholders should close old accounts

According to a recent report consumers in the UK need to take more care to close their old credit card accounts when they have disused cards that they no longer use. Read more

Tags: fraud, MasterCard, consumer, Credit Cards, credit card fraud, close credit card accounts

AMEX increases rates for late payers

Credit card giant American Express has recently announced that cardholders that make late repayments on their credit card, or those that miss repayments, will be penalised with higher interest rates. Read more

Tags: late payments, american express credit cards, Credit Cards, payments, interest rate, economics, credit card charges, american express

Christmas clubs increasing in popularity in current financial climate

A couple of decades ago Christmas clubs in the UK were extremely popular amongst consumers that wanted to ensure that they had enough put by for the Christmas period when they would have to spend a fortune on gifts and food. Read more

Tags: office, north midlands, christmas clubs, spending, christmas

Credit card rates will have to come down

In a recent report a leading consumer watchdog groups has said that credit card interest rates in the UK are going to have to come down. Read more

Tags: higher rates, year, credit card rate, interest rates, increase credit card rate, choice, company, Credit Cards

Some cardholders could spend more than a lifetime paying their credit card debt

Concerns have been expressed recently that some credit card holders who are customers of the credit card giant Barclaycard could end up spending more than their lifetime trying to repay their credit card balance, after the credit card company announced that it was planning to reduce the minimum level of repayment that it was asking from its customers each month. Read more

Tags: credit card debt, GBP, month, company, industry, bill, Credit Cards, best interests

Egg charges monthly fee on new card

Internet financial giant Egg has recently announced that it will be charging a monthly fee of £1 on its new credit card, which is the Egg Money World Mastercard. Read more

Tags: mainstream products, ban, Egg Money World, MasterCard, Credit Cards

Guide developed to help cardholders use cards effectively abroad

A new guide has been developed to help consumers learn more about using their credit cards abroad more effectively and sensibly. Read more

Tags: new guide, apacs, Credit Cards, The new guide, credit cards abroad, fraud, year

Government and many other credit cards fail to do proper income checks

In the current financial climate most industry experts would agree that credit card providers need to ensure that they carry out proper income checks on applicants to ensure that they can afford the repayments on their credit card debt, particularly given the high level of defaults. Read more

Tags: Labour, income checks, Credit Cards, fact, rate, political parties, lack, way

Consumers should exercise common sense when using credit cards abroad

An industry expert has said that with the summer holidays coming up, and many Brits planning to head abroad and use their credit cards, consumers need to ensure that they use their common sense when it comes to using their credit cards whilst abroad. Read more

Tags: Credit Cards, credit card fraud abroad, credit card fraud, UK Cards Association, credit cards abroad

Lower income consumers can apply for many credit cards

It has recently been revealed that despite the tighter credit conditions that have come into play since the onset of the global credit crunch many consumers who are on relatively low wages are still eligible to apply for the majority of credit cards that are available on the market. Read more

Tags: determining eligibility, Credit Cards, debt, labour credit cards, card, low income families, big fuss, interest

Many people putting their overdraft debt onto their credit cards

It has been claimed that many people are now turning to credit cards to get rid of their overdraft debt, with many putting their costly overdraft debt onto low interest or interest free credit cards in order to try and save some money on interest. Read more

Tags: interest charges, 0 balance transfers, Credit Cards, credit card debt, free credit cards

Consumers advised to pay credit card debt and not save

In the current economic and financial climate, with the recession threatening the jobs of many people, it is not surprising that many people decide to put every spare penny into savings in the event that they should find themselves short of cash or experience a drop in income. Read more

Tags: savings, Stoozing, interest rates, credit card debt, base, fact, Credit Cards

Comparison sites could help find the best credit card deals

Industry experts have recently said that in the current financial climate, with many credit card companies cutting back on deals and enforcing more stringent regulations, many consumers could find that they are better off using a comparison site to find the most suitable credit card deals for their needs. Read more

Tags: card provider, credit card comparison, damaged credit, comparison site, compare credit cards, card comparison sites, risk, Credit Cards

Credit card summary boxes will be easier to understand for consumers

From June of this year credit card applicants and customers should find that the credit card summary boxes on the application forms and marketing materials of credit card providers is far easier to understand. Read more

Tags: shop, Marketing, consumer, Credit Cards, credit card summary box, industry body association, Payment systems

Updated summary boxes could help credit card customers

For many people finding the right credit card can be difficult enough at the best of times, but when credit card providers use technical financial jargon on their marketing materials and application forms this can make the matter even more complicated. Read more

Tags: addition, credit card providers, application, box, Credit Cards, credit card summary box

Credit card increases need to be questioned

Over the past few days credit card firms have pledged to make changes to the way that they hike up interest rates on credit cards, which has come under intense fire recently. However, whilst credit card firms are trying to make changes to stop these overnight interest rate hikes, there are people that may have recently already had their credit card interest rates hiked for no apparently reason, often adding a small fortune to their repayments. Read more

Tags: creditard firms, rate, statement, credit card fees, reason, Credit Cards, service, interest rate

Campaigners do not think price comparison sites will necessarily mean the best credit card deal

According to some officials from a consumer campaign group sing a price comparison site to try and get the best deal on a credit card will not necessarily prove effective. More and more price  comparison sites have sprung up over the past couple of years, and many people use these to try and get the best deals on credit cards as well as on other products and services such as loans, mortgages, insurance, utilities, and more. However, officials have said that these sites will not necessarily mean that you are getting the best deal. Read more

Tags: Business Finance, comparison, research, business, consumer campaign, couple, Credit Cards, try

People ‘to spend less on insurance’

Consumers are hoping to reduce their spending on insurance products, research suggests.

Among consumers who buy insurance through price comparison sites, 26 per cent are looking to reduce their insurance spending, according to the survey commissioned by business advisory firm Deloitte.

One-fifth of those who hope to reduce their spending on insurance aim to cut their payments on payment protection insurance (PPI), which provides coverage if the borrower is unable to make repayments on products like loans, mortgages and credit cards in the event of ill-health, unemployment or death.

David Rush, insurance partner at Deloitte, said: “At a time when households have less disposable income, it is understandable that many will look at how they can reduce their spending.

“However, consumers should think carefully about which types of insurance they most need in a down-turn.”

Mr Rush suggested that people are most likely to need PPI cover if the economy enters a difficult period.

In related news, Sainsbury’s Bank has suggested that consumers should check with their car insurance provider before they drive abroad to ensure that they are fully covered.

Tags: credit, comparison, One-fifth, period.In related news, Credit Cards

Can you benefit from being a credit card rate tart?

There are so many different types of credit cards in circulation in the UK these days it can be difficult to determine which one might best suit your needs and circumstances. However, for some people getting value for money on credit cards means chopping and changing cards regularly to make sure that they are always getting the best rates, deals, and rewards. As a rate tart you can not only enjoy the convenience, flexibility, and benefits of credit card use, but you can even make money and rewards from spending on your credit card. Read more

Tags: rate, rate tarts, Credit card, business, Credit Cards, personal finance

Avoiding credit card pitfalls

Credit cards have proven invaluable to consumers in the UK over the years, and with such a wide range of cards now available there is something to suit everyone, from those looking for interest free credit to those with poor credit who want a chance to try and rebuild their credit rating. Credit card offer many excellent benefits, including total ease and convenience, as well as the chance to take advantage of a range of rewards such as cash back, rewards, air miles and more. Many cards also offer benefits such as extended warranty on purchases, protection against loss or damage of purchases, emergency card replacement services, and more. Read more

Tags: Credit Cards, debt, repayments habits, credit card pitfalls, sort, Many cards, cannot, credit card balance

2.5 million accounts hit as banks tighten finances

New research has revealed that over 2.5 million credit card customers were either charged a fee, had their credit limits reduced or their accounts closed as banks tried to recover money lost through debts and penalty fees.

Of the customers affected by the new moves, only 16 per cent missed more than one monthly repayment or went over their credit limit in the past year, the study by uSwitch.com has found.

Simeon Linstead, head of personal finance at the company, said that banks should not close accounts, reduce credit limits or adopt annual or monthly fees without giving their customers a reason for doing so.

“We’re not against credit cards providers curbing consumers’ spending if their debts are genuinely getting out of hand,” commented Mr Linstead.

However, he added that credit card companies that “make changes to customers’ accounts must be completely open about how and why they have selected those customers.”

Controversial bank charges are set to be investigated by the Office of Fair Trading.

Tags: penalty, Credit counseling, 5 million, Credit Cards, trading, credit limits

British turning to overpriced “payday loans,” says expert

British consumers are increasingly turning to “payday loan” providers, which offer loans at annual percentage rates (APRs) of up to 1,355.

The loans, which are popular in the US, pay customers up to £750 into their bank account with an agreement to repay the loan at the end of the month when their paycheque arrives, according to a financial expert at fool.co.uk.

However, they typically charge £25 for every £100 borrowed, rising to £31.25 if the customer fails to pay it back on payday and can reach £1,400 if a borrower does not make any payments for a year, claims the website.

“These truly ugly loans are overpriced, overused and over here. Brits are falling victim to this form of borrowing when they should be fleeing from it,” Laura Starkey, a financial expert at price comparison site fool.co.uk, told the Independent.

To survive the credit crunch icWales.co.uk advises people to cut down on car journeys to save petrol, switch their utilities supplier and change credit cards to get the most competitive rates.

Tags: Credit card, credit, To survive, price, Payday, utilities supplier, Credit Cards, comparison

Brits prefer cards to cash

vNearly a third of British consumers use their credit cards for everyday spending, according to new research.

Findings from Fool.co.uk showed that debit cards account for over a third (37 per cent) of spending while cash accounts for over a quarter (29 per cent).

David Kuo, head of personal finance with Fool.co.uk, said that using plastic is useful but relying on money that cannot be seen is indicative of the recent reliance on credit that is apparent in our culture.

“It is more important than ever to build a decent savings pot because one day when you need to pull a rabbit out of the hat, you could find that all you have is a dead duck in your pocket,” he said.

Further results of the study showed that fewer people carry cash, with nearly half of us withdrawing money once a week or less.

Meanwhile, last week, Chris Tapp from Credit Action said that anyone looking for a new credit card should shop around to make sure that they get the best possible deal they can.

Tags: duck, Electronic commerce, Credit Cards, Brits, day, business, debit, personal finance

70 working days needed to pay off average debt interest, survey claims

People who borrow money using personal loans and credit cards need to work for an average of 70 days per year just to pay off the interest their borrowing accrues.

That is according to Unbiased.co.uk, which has proclaimed March 10 “Debt Freedom Day” to draw attention to amount of money consumers are having to pay just to service their debts – let alone pay them off.

Last year’s Debt Freedom Day fell on February 1, and this year’s date reflects the dramatically increased amount of unsecured borrowing British consumers are taking out.

Although credit card borrowing has fallen slightly from last year £55.6 billion to £54.9 billion from 2006 to 2007, the value of personal loans taken out has risen to £9.8 billion from £2.6 billion last year.

Combined with the effect of the credit crunch – which has pushed up the rates of interest charged on personal loans by an average of 0.5 per cent in the last year – debt and interest have soared.

Unbiased chief executive David Elms warned: “While Debt Freedom Day is of course a hypothetical point in the financial calendar, people should pay attention to it. In the current economic client is has never been more important for people to realise just how much it costs to service their debts and to ensure they have adequate funds available to do so.”

Tags: cent, Credit Cards, point, Unbiased, credit crunch

Christmas spending goes on credit cards

The effects of the credit crunch failed to deter Christmas shoppers with a seasonal increase in the average outstanding balance recorded, according to new research.

Findings from Moneyextra.com shows that many spenders put their festive spending on their credit cards as the average balance jumped 17 per cent in January to £2,168.

Robin Amlot of Moneyextra.com, said: “There is a clear trend of falling outstanding credit card balances over the course of the last three years. The question is whether this actually reflects consumers clearing debts or merely a rescheduling of them.”

He adds that there is now a rise in other forms of borrowing, notably secured lending as consumers look to re-schedule expensive high-interest rate short-term credit card debt.

However, although credit card balances are up from the £1,842 recorded in December, they have not increased as much compared with previous years.

January 2008’s figure is down 25 per cent when compared with an average balance of £2,901 at the same time in 2007.

Meanwhile, Moneyextra.com said that consumers could save more than £4,500 by shopping around for financial products.

Tags: course, Credit Cards, economics, moneyextra, clear trend, Robin Amlot, card

Millions of Brits miss credit card payments

Approximately 5.5 million credit card customers missed payments in the last year according to research from Moneysupermarket.com.

The findings revealed that 13 per cent of spenders skipped a bill payment while credit card payments are the most likely to be missed with seven per cent going unpaid.

Steve Willey, head of credit cards at moneysupermarket.com, said: “Close to three million credit card holders will have paid out over £35 million between them in penalty fees.”

“But it is the damage to their credit rating that is more costly to them and to the other 2.5 million consumers who have missed payments elsewhere,” he added.

Credit card bills are the most likely debts to be missed by those aged 25, while the 25 and 34 age group also proved the worst at repaying with 12 per cent of respondents not keeping up to date.

The 18 to 24 age-group are most likely to miss mobile phone payments.

Meanwhile Moneysupermarket.com has also warned that specialist insurers can be the most expensive insurance agents.

Tags: cellular telephone, bill, Credit Cards, percentage, group

Credit cards recommended for online Christmas shoppers

Brits enjoying a more relaxed Christmas shopping experience online are advised to use their credit cards for enhanced protection.

According to Simon Crisp, director of Shopsafe.co.uk, consumers can improve their legal security by using a credit card for online purchases.

He added that, if doing so, they should also take the measure of registering the card with their bank with the new schemes available from Visa and Mastercard.

“There’s actually new schemes being launched by the credit card companies – one’s called Verified by Visa, the other is called Mastercard SecureCode.

“Both let you register your credit card with your bank, and put a password on your credit card, so that only you can use that card.”

He said that this will protect the user against identity fraud and theft as the retailer knows that only the consumer is in possession of the password.

According to consumer group Which?, 69 per cent of Brits will do their Christmas shopping on the internet this year to avoid the “crowds” and be able to “compare prices more easily”.

Tags: uk consumers, security, fraud, online christmas shoppers, MasterCard, shopping on the internet, cent, Credit Cards

Charity credit cards ‘help children in need all year round’

Consumers are advised that charity credit cards can help them reach children in need every day of the year.

Today, Children in Need is celebrated around the UK with nationwide collections in expected to reach into the millions.

However, according to the Fair Investment Company, charity credit cards allow a donation to be made each time the card is used with no extra cost to the user.

There are many options, with a variety of children’s charities available at which consumers can effortlessly direct their generosity.

The Co-op offers The Children’s Society Card, which donates £5 with every account opened, with further donations when the card is used.

Meanwhile, Halifax supports two children’s charities through card offers, Save the Children and the NSPCC. Halifax donates at least £20 on the first use of the card and after that 0.25 per cent of any spending on the card.

Director at Fair Investment Company, James Caldwell, commented: “If you want to support a charity, a charitable credit card will allow you to donate every time you make a purchase.

“Charity credit cards can also make a real statement; each time you use the card it is good publicity for the charity.”

Tags: use, time, CardHub.com, Credit Cards, card it, user, finance

Blocked spending on credit cards problematic

Young travellers who take a parent’s credit card with them on their travels are finding it blocked for appearing fraudulent, gapyear.com has said.

Backpackers are often found to be spending abroad while their parents are simultaneously carrying out transactions on a copy of the same card at home which can lead to the provider stopping the card.

Tom Griffiths, founder of the travel website, said: “Because they visit a few countries in a limited amount of time, it looks like fraudulent behaviour.

“And, if they’re away from home, the credit card company tries to contact them but obviously they’re inaccessible, so their cards are being blocked. That’s a big problem at the moment [for] backpackers.”

He added that many parents give their children a credit card for cases of emergency as their “biggest fear” is them finding themselves without “access to cash” while away from home.

Furthermore, he said, there is now a specialised card coming in for backpackers and gap year travellers that is prepaid and allows transactions with no risk of blocking. It also removes the common problem building up “uncontrollable debt”.

According to gapyear.com 230,000 people take a gap year between the ages of 18 and 24, spending an average of £3-4,000.

Tags: Credit card, Parent, amount, Credit Cards, card.tom griffiths, fear, credit, copy

Millions of Brits to switch credit cards

It is estimated that 6.5 million people in the UK will change their credit card provider in the coming year.

Over half of Brits switch credit cards to profit from interest free introductory offers for balance transfers, according to a study by Abbey.

The figure will see a five per cent increase on changes made last year and represents a total transfer between cards of £11 billion.

Roger Lovering, managing director of Santander Cards Limited, said: “These figures just show the intense competition in the credit card market. With £11 billion at stake, it’s the credit card with the best deal that wins.”

Furthermore, Abbey’s research showed 19 per cent of consumers change cards in order to take advantage of a lower APR.

Six per cent felt that a different card might have more “kudos”.

Mr Lovering added that Abbey offers interest free balance transfers for 12 months, as well as three months of interest free purchases.

Virgin are currently offering 15 months of free balance transfers with a typical APR of 15.9 per cent.

Tags: free introductory offers, 5 million, year.Over half, advantage, increase, Credit Cards, interest rate

Credit card companies ‘exploit customers’

Many credit card providers are using the order of repayment to make extra money out of the customer, new research has found.

When users are paying off debt in small repayments, card companies are directing the money to paying off the cheapest debt first meaning that they can continue to collect money on debts with high interest rates, according to MoneyExpert.com.

The website claims over three quarters of credit card companies employ this tactic which can significantly “sting” a customer who is generally unaware of the order of payments rules.

It found that 76 per cent of credit cards clear cash withdrawals debts last, and with average interest rates at 23.96 per cent on them, it can prove unnecessarily expensive for customers.

Chief executive of the company, Sean Gardner, advised: “As with all credit card deals you need to check that the card you’re using is suited to your requirements.

“If you do want to use your card for cash withdrawals or purchases there are some cards that’ll help you pay those off first to help you avoid prolonging the interest incurred. But those are few and far between.”

Further information about finding the right credit card provider can be found on market comparison sites such as nationsfinance.co.uk.

Tags: Moneyexpert, credit, credit card providers, business, debts, comparison, Credit Cards

Cashback key to credit card success

Nearly one quarter of credit card users – 7.7 million people – are considering reducing the number of cards that they have and consolidating them into a single card that offers them all the features they require.

In a survey of consumers, Abbey found that cashback is considered the most important feature for a credit card to have.

While 20 per cent said it was vital they could get cashback, 16 per cent said they would only choose a card with a low APR and eight per cent were hunting for a card with a consistently low flat rate.

Another six per cent wanted shopping discounts, while four per cent hoped to find a card that would reward them with free air miles. Only one per cent of the sample was looking for a charity credit card.

“In the current climate, people are becoming more and more savvy about the impact numerous cards have on their credit rating and a significant number of cardholders are now looking to consolidate all their credit cards,” said Roger Lovering, managing director of Santander Cards UK.

“Abbey looks set to benefit from this as cashback is the feature people say they value most.”

According to MoneyExpert.com, a growing number of cards are now offering cashback schemes, but the average rate offered is just 0.72 per cent.

Tags: card success, Credit Cards, credit rating, cashback, Tesco Clubcard, low flat rate

Are banks playing on the consumer’s conscience?

Over recent months consumers in the UK have been finding more and more services and products that are going ‘green’, enabling them to get the services or products that they need whilst also helping the environment. Read more

Tags: consumer, green credit card, Credit Cards, bank accounts, Credit card, banks, way, Payment systems

Loans to family ‘may be counterproductive’

People who lend money to friends and family may only be a short-term fix for those in debt, according to one expert.

Stephen Rose, the director of the not-for-profit information provider Debt Advice Bureau, argues that issuing loans to people who are in debt may only mask an underlying financial issue.

“We have seen a minority of cases where people have wracked up debts and – usually a parent – has bailed them out and paid off their credit cards.”

“And in no short space of time debts are being wracked up again,” he adds.

As such, Mr Rose argues that if someone is tempted to loan money to a loved one they could instead work with the person to establish where their money is going.

The directors’ comments follow research from DebtSmart found that out of the 59 per cent of people who had leant money to a friend, just over one in four had been repaid.

Tags: money, Mr Rose, advice, comments follow research, loan money, loan, Financial services, Credit Cards

No more chip and pin for RBS credit cards

The Royal Bank of Scotland (RBS) is all set to introduce a new contactless credit card which uses radio waves to make payments.

All you have to do is touch the new credit card on terminals provided at participating outlets to pay for items under £10 – no pin is required.

Shops will start to use the new technology in September. RBS’ launch comes close on the heels of the new OnePulse credit card introduced by Barclays.

The OnePulse card works in the same way but can also function as an Oyster card, Barclays having signed a three-year exclusive deal with Transport For London.

The speedy nature of RBSs new credit card’s transactions was displayed after the company drove an AT & T Williams formula one car to a McDonalds drive through to buy a meal using the new technology this week.

Tags: September, chip and pin, formula, Credit Cards, The Royal Bank of Scotland, McDonalds, chip, card

Touch-and-pay Barclaycard launched

Barclaycard’s new OnePulse, an innovative contactless credit card, already has 1,000 shops in London signed up to accept it.

OnePulse is now all set to be launched next month.

The card’s major innovation is that items costing less than £10 will be able to be purchased in participating retail outlets without customers having to type in their PIN.

Guy Harvey, financial director at resteraunteurs Eat – one of OnePulse’s new clients – said that he was “excited” by the scheme.

“It will help us to eliminate some of the frustrations for our customers, such as queues in the busy lunchtime rush.”

The card was inspired by the Oyster card system, launched by Transport for London in 2003. For the first time, the city’s residents could touch in and out by using smartcards, and were no longer forced to buy paper tickets.

Users of OnePulse will also be able to use the new product as an Oyster card, Barclaycard has previously announced.

The BBC reports that Visa and Mastercards will also be introducing touch-and-pay technology in “certain London locations” from next month.

Tags: bbc, scheme, Guy Harvey, smartcards, OnePulse, GBP, Credit card, Credit Cards

Students given warning on credit cards

As thoughts begin to turn towards the new academic year, British students were advised by experts at Barclaycard yesterday that, while credit cards can be a good way of managing finances if used wisely, they can also drive up debt.

Students’ attention was also drawn to the relatively high rates of repayment demanded by card lenders in the UK.

The lender gave the advice at its new student website, which advises customers to shop around for the cheapest credit deal.

Barclaycard’s managing director of UK cards, Amer Sajed, said of the site launch: “Cards can be a lifeline for students managing a tight budget. They can help make the most of your time at university and establish a credit record for the future, but only if they are used sensibly.

“Our new site includes some blunt advice to help our customers make the most of the benefits and avoid the pitfalls.”

Tags: education, managing director of UK cards, university, british students, future, Credit Cards, cheapest credit deal, good way

UK consumers struggle to remember pin codes

Research from high street bank Abbey has today revealed that consumers have trouble remembering their pin codes.

Fully 39 per cent of those polled by the card provider said that they write down their numbers so as not to forget them – although a big majority of this group disguised them in some way.

Making records of pin codes makes credit card fraud far more likely, as does making all cards carry the same code, as admitted to by 14 per cent of respondents.

Around 55 per cent admitted to having forgotten a number, with card holders increasingly owning more than one piece of plastic.

The survey found that six million Britons hold three cards, around three million hold four, and two million hold five cards or more.

Steve Shore, head of banking at Abbey, said that with many consumers holding multiple cards, “the challenge of remembering all those PIN codes is getting greater.

“But we really do urge you to try and commit them to memory rather than write them down. Otherwise it’s like signing a blank cheque for fraudsters.”

Tags: Credit Cards, card, piece, cent, head of banking, Payment systems, way

Compare Credit Cards – UK Credit Card Comparison

When looking for credit cards it is important to compare a range of cards to ensure that you find the right card for your needs.

There are many different credit cards to select from, offering everything from special interest rates or 0% interest to cash back and rewards. You can enjoy getting the best deals on a range of top credit cards when you take the time to run some comparisons, and this can be easily done online. Whether you are looking to conduct balance transfers or make purchases or whether you want to accrue rewards you will find a vast choice of cards to suit most needs.

For those wishing to transfer their balance from existing credit cards onto a 0% balance transfer card there is plenty of choice available. When you compare a range of credit cards you can find cards that offer the longest interest free periods on balance transfers, which will give you even more time to pay off your debt without incurring interest charges.

When it comes to finding the perfect credit card for purchases you can compare a range of cards that offer low interest rates and some that offer an interest free period on new purchases. These cards are ideal for those that want to make purchases on their credit cards, and wish to spread the repayments and pay minimal or no interest.

For those that tend to repay their balance in full each month rewards credit cards and cash back credit cards can be very effective, and you can find the best rewards cards by taking some time to compare different credit cards from a range of card issuers. You will find some great deals on many of the top rewards based credit cards and cash back credit cards online, and you can make comparisons quickly and easily.

Because the interest rates, benefits, and terms and conditions on credit cards can vary so widely it is important to make comparisons in order to increase the chances of finding the best card for your needs. Thanks to the power of the Internet you can now carry out these comparisons quickly and conveniently from the comfort of your own home.

Once you have compared a variety of credit cards and found the best one for your needs, you can also make your application online and in many cases you will receive an instant decision in principle on your application.

Tags: cash back credit cards, free periods, balance transfers, everything, credit card comparison, decision, Credit Cards, compare credit cards

Debit Card – It Was Twenty Years Ago Today

It may be hard to believe, but 3 June 2007 marked the twentieth anniversary of the first ever debit card to be launched. It was the Barclays Connect Card. It wasn’t long before the cards became popular with users, and within just nine months, the bank had issued a million debit cards. In the UK in 2007 there are around 68 million debit cards in issue, on which are made 143 purchases a second, totalling 6.8 billion transactions every year.

There are now more debit cards in circulation than credit cards, and there are 85% of adults who own one, compared with 66% who own a credit or charge card.

Debit cards haven’t stood still in twenty years, and they are now moving into the world of prepaid debit cards and ‘wave and pay’ technology. The former enables customers to out a positive balance onto the card before they begin to use it when on holiday or a shopping spree, and the latter technology lets consumers make relatively small purchases by simply waving their cards in front of the terminal.

Barclays’ own figures suggest that an average customer will make 210 debit card transactions in a year, with a total spend of very nearly £10,000 on the card. Apparently the biggest spenders come from Battersea who spent an average of £15,840 on their cards in 2006. At the other end of the scale, the lowest spenders were from Small Heath in Birmingham who use their cards only 92 times in a year average, with a spend of less than £5,000.

Other figures tell us that women use their cards a quarter as much again as men who actually spend 33% less than women, the figures being £52 for women and £39 for men, per transaction.

The frequency of debit card use is increasing year by year. They are most frequently used in supermarkets, where a third of all debit card transactions occur. This is followed by petrol stations where one in nine transactions take place, and departments stores take one in nineteen of all debit card transactions. Between these three destinations, they take more than half of all debit card transactions. There is a challenge, though, because the fastest growing purchase area is going to be, inevitably, from internet purchases.

Even popular games manufacturers have to move with the tide. Parkers, the makers of the Monopoly game board, have phased out cash in favour of debit cards in a new version. Instead of the garishly coloured bank notes, players will use Visa debit card instead to keep track of their money coming in and going out. There is an electronic machine which takes the card and the banker enters the details of the transaction.

Parker said it has to move with the times and its change to the game reflects the nature of society and technology advancements. Adults now use cash 70% less frequently than they did ten years ago. The electronic game is more expensive than the standard version, but if you’re short of cash…

Tom Smith
16th June 2007

Tags: tide, barclays, spree, small heath, Credit Cards, uk, Debit card

Bailiffs will be regulated

Those of us in debt will be protected from overzealous bailiffs by a strict new licensing regime.

That is the promise of constitutional affairs minister Vera Baird who says that bailiffs will not be given the power to forcibly enter a domestic property until the new licensing system is in place.

It comes as new laws are set to be introduced which will give bailiffs to right to force their way into a property to collect debts due for credit cards, loans and other bills.

The proposed laws have caused controversy as it is claimed that bailiffs are not properly policed and consumers need to be protected from rogue elements.

“Concerns have rightly been expressed about the right of bailiffs to force entry to people’s homes,” commented Ms Baird.

“We have always said forced entry can only be used as a last resort and when all other avenues have been exhausted.

“Today, I’m happy to announce this power will not come into force until those bailiffs who are not Crown employees are licensed by an independent regulator. This will help to further protect the public,” she added.

Ms Baird’s announcement has been welcomed by Citizens Advice, although the organisation has warned that regulation of bailiffs must be “robust”.

If you are in debt do not ignore the problem and hope that it will go away. If you contact your lender or debt collection agency to arrange a repayment plan you can begin to pay off the debt and avoid having bailiffs visit your home.

Tags: debt, avenues, way, independent regulator, proposed laws, repayment, Credit Cards

Card holders wasting millions on holiday

Credit card holders are being warned that they may be wasting millions of pounds on fees by making purchases while abroad. Read more

Tags: research, purchases, Credit Cards, holiday, GBP, Credit card holders, provider, cent

Lloyds TSB’s annual credit card charge

People with a Lloyds TSB credit card that they do not use regularly face being charged for the pleasure of owning one.

It is the first sign that banks may be seeking to recoup the money they are likely to lose as a result of pressure to cut penalty charges, as predicted by research firm Defaqto this week.

The bank has announced that people who do not use their credit cards will be hit with an annual charge of £35.

However, Lloyds has failed to reveal what they define as low-usage, meaning many people may find themselves in a state of limbo.

People who have a card but do not use it at all have been told in no uncertain terms that they will be charged and are being advised to cancel the card and destroy it.

“It costs the bank money to issue cards to customers who are not using them. This is intended to get them to start to do so,” a spokesperson from the bank told the Guardian.

In a bid to tempt consumers into using their cards more often, Lloyds is offering zero per cent interest on all purchases until May this year.

Earlier this week Defaqto’s head of banking, David Black, said that he would be “very surprised” if free banking was still available in the UK in two years time.

“The first major provider to introduce charges for all customers is going to take a lot of flak but it is likely that the majority of the main providers will then follow the lead,” he said.

If you have an unused credit card with Lloyds TSB make sure that you cancel it and, for security reasons, cut it up before throwing it away.

Tags: limbo, Credit Cards, provider, majority, interest

Credit card borrowing falls

The amount of money we borrow on credit cards fell in January, with industry experts saying this shows we are all managing our finances better.

Figures from the British Insurance Brokers’ Association (BBA) show that borrowing on credit cards fell by £0.5 billion in the first month of 2007.

This is despite increases elsewhere across the board, with mortgage lending rising by £5.6 billion and total UK lending to the private sector growing by £21.9 billion.

A lack of borrowing on credit cards is being seen as a positive sign that personal finances are being better managed by the majority of the population.

“We can see that the January sales did not encourage borrowing on credit cards,” said David Dooks, director of statistics at BBA.

“As in the second half of last year, card borrowing is contracting and, with weaker retail sales being reported, this reflects the consumer’s current attitude to spending and their commitments.”

The BBA has also revealed that levels of unsecured personal lending were unchanged in January.

Figures for mortgage lending were in line with the monthly average increases for the last six months, with Mr Dooks saying that the rise was expected.

“Mortgage lending continued to be buoyant, as we expected following the high volumes of approvals in the final quarter of last year,” he added.

Tags: positive sign, retail sales, Credit Cards, second half, january sales, credit, January, rise

UK lending figures rise

Lending to individuals in the UK rose again in November, according to the Bank of England.

Figures show that there was an increase in all types of loans of £10.9 billion between October and November.

Credit cards, personal loans and overdrafts increased by £0.2 billion, while mortgages saw the biggest increases.

In total, November saw a £9.8 billion increase in mortgage lending compared to October, signalling a rise of 0.9 per cent.

“This is a very strong set of mortgage data. Mortgage approvals amounted to a near three-year high of 129,000 in November, while lending secured on dwellings amounted to a three-year high of £9.8 billion,” said Howard Archer of financial consultancy Global Insight.

Mr Archer said that unsecured borrowing “eased back” between October and November as consumers become more concerned abut their future financial situation.

“Elevated debt levels, higher interest rates, rising unemployment and increasing pension concerns mean that there is an increased need for many consumers to try and improve their finances,” he added.

He said that more and more people are switching to secured borrowing to finance their spending.

Tags: november, mortgage lending, mortgage, overdrafts, abut

Credit Card Charges

A return to form

Some years ago annual fees on credit cards were common. Today as the credit card companies compete amongst themselves for consumer business with zero percent enticements most annual fees have disappeared. Now, as a result of what the industry regards as lost income through consumer fickleness the threat of annual fees is back.

We’ve looked at a group of cards provided by American Express, some of which incorporate a fee into their benefits package and ask, are the annual fees worth it? And do all lending companies re-coup their “losses” by penalising users who step out of line?

An Alliance

In the Summer of 2005 American Express and British Airways announced they were going to continue the British Airways American Express credit card scheme. They now offer three cards under this heading: the basic card, the British Airways American Express Premium card and the Express Premium Plus card. The Premium Plus card has an annual fee of £120.

This is admittedly very high compared to most annual fees of “lesser” cards. Even others in the Amex group where an annual fee is charged it is either £30 or £60. So, why the difference?

The intention is clear

The picture becomes clear when you look at the figures for total charge for credit and interest on each of their cards.

This figure is arrived at by adding together the interest charged and an annual fee. It’s based on borrowing a sum of £1,500 which is repaid in equal monthly instalments over the period of one year, but does not take into account any separate promotional incentives that may be run on any particular card.

The three basic cards in the American Express range have charges totalling between £123.72 and £152.81. The Premium cards vary from £123.72 to £140.79.

All very similar, when you consider that the cards annual fee varies from £30 to £120! So basically you either pay more in annual fees or you pay more in interest. Either way the company, makes sure on this sum that a user of any of the six cards is going to get charged between £120 – £150 for the pleasure of using the card.

But I hear you say, what about the other benefits to the user? Yes, these cards award 1.5 BA miles in return for every £1 spent on the card. Good value? …. Possibly, If you compare it to the Air Miles credit card which gives only 1 Air Miles point for every £20 spent on that card.

Is it worth It?

The bottom line is that any card such as this one from the American Express and British Airways alliance will be of benefit to the user and worthwhile if the user already purchases what the credit card company is offering. In the case of these cards, the premium cards are aimed at small business use, so a fee of £120 isn’t going to break the bank and small companies whose employees do a lot of air travel are likely to jump at these cards.

What they do illustrate however, is that the credit card companies have carefully calculated the expected returns from each of their products. After all these are financial institutions, unlike most of their consumers they understand how to make money! They are not charities and they have reams of data telling them how much money they can expect to make from each of their products.

Punish the offender

The variable for all credit card companies is the way each user actually uses their card and do they love it when somebody steps out of line and doesn’t pay on time, or goes over their credit limit!

In early 2003, The Office of Fair Trading launched an investigation into the penalty charges levied by credit card companies to establish whether they were in fact “excessive”. Despite findings that indicated the fees of £20 and £25 charged to the consumer were greater than the costs to the lender of such defaults, it appears many credit card companies continue to charge what they like, as quite a few still charge these high rates.

Unenforceable?

Speaking in 2005, barrister Richard Colbey from Lamb Chambers declared that “Credit card penalty charges are legally unenforceable because they seek to punish the borrower rather than compensate the bank for any losses that they have suffered as a result of the unauthorised borrowing”

Perhaps this explains why if you have omitted to pay on time or accidentally exceed your limit the credit card companies are usually willing to repay part of the penalty incurred. But they will never waive them completely.

Tags: Credit Cards, Express credit card, Credit (finance), Richard Colbey, Credit card, cards annual fee, american express credit card

Bank Accounts For Bad Credit Applicants

With all the different products on the market today there must surely be a Bank Account available for somebody with a low credit rating. Or is there?

Read more

Tags: Banking, bad credit bank accounts, bank accounts, Credit Cards, FSA Banking articles, time, answer, bad credit