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16 Nov 2019

News

Credit card crunch

Michelle Slade, analyst at Moneyfacts.co.uk, comments:

“Until recently the credit card market had seemed to continue along as it always has. Lenders extended introductory deal dates as they always have, some lenders amended their rates, while others increased charges.

“However, since April we have seen a marked increase in the number credit cards increasing their rates and charges.

  • 19 purchase rate increases (see table below for details of card increases)
  • 14 cash rate increases (see table below for details of card increases)
  • 8 cash withdrawal fee increases
  • 5 cards have increased balance transfer fees
  • 3 increases to foreign usage charges
  • 2 PPI increases
  • 2 minimum repayment reductions
  • 1 increase to account fee

 
“Credit card companies usually tend to shy away from increasing the purchase rate as this is the headline rate all consumers will look at when selecting a new card. Many card companies have preferred instead to increase the rates and charges that many consumers may take little notice of when selecting a card.

“The Nectar Amex card from American Express has seen a 3% increase in the purchase rate. If a consumer had £3,000 on the card and repaid just the minimum, they would now have to pay an additional £1,073 more than they would have before.

“Some of the recent changes could perhaps be justified by lenders’ increased risk and cost control as a result of the credit crunch. Others, such as reducing the minimum repayment, could just be seen as squeezing more profit from those who are already feeling the pinch.

“Clydesdale Bank and Yorkshire Bank have reduced their minimum repayment from 3% min £5 to 2.5% min £5. If you had a balance of £5,000 on their cards, charging 15.9% APR, you would have paid £3,268.89 in additional interest over 19 years and 2 months by repaying the minimum at 3%. By dropping it to 2.5%, you repay £4,548.69 and it will take you 25 years and 2 months to clear. That adds an additional £1,279.80 to the debt.

“Although it may appear to be a slight relief to consumers struggling to keep up with existing monthly repayments, it has a much more negative effect in the long run.

“With reports showing more and more consumers using their credit cards to keep their heads above water, these increases will be a big blow. “

 

Purchase Rate Increases

Card

Purchase APR 30.3.08

Purchase APR today

Increase

Nectar Amex

15.9%

18.9%

3%

Barclaycard Platinum Cashback MasterCard/Visa

14.9%

15.9%

1%

Barclaycard Platinum Long Term Balance Transfer MasterCard/Visa

14.9%

15.9%

1%

Capital One Platinum MasterCard

9.9%

12.9%

3%

Debenhams MasterCard

18.9%

19.9%

1%

HSBC Bank Credit Card MasterCard

15.9%

16.9%

1%

Mint MasterCard

12.9%

14.9%

2%

NatWest Credit Card MasterCard/Visa

13.9%

15.9%

2%

NatWest Gold Card Account MasterCard/Visa

13.9%

15.9%

2%

NatWest Platinum MasterCard/Visa

13.9%

15.9%

2%

Post Office Classic MasterCard

16.9%

17.9%

1%

Royal Bank of Scotland Classic MasterCard/Visa

13.9%

15.9%

2%

Royal Bank of Scotland Gold MasterCard/Visa

13.9%

15.9%

2%

Royal Bank of Scotland Platinum MasterCard/Visa

13.9%

15.9%

2%

Smile Classic Visa

18.9%

20.9%

2%

Smile Current Account Customer Classic Visa

15.9%

16.9%

1%

Smile Gold Visa

16.9%

18.9%

2%

Smile Current Account Customer Gold Visa

11.9%

12.9%

1%

The Co-operative Bank Clear Visa

11.9%

12.9%

1%

Source: Moneyfacts.co.uk 15.7.08

  

Cash Rate Increases

Card

Cash PA 30.3.08

Cash PA today

Increase

Egg Visa

22.9%

24.9%

2%

Debenhams MasterCard

22.9%

29.947%

7.047%

Mint MasterCard

24.942%

27.948%

3.006%

NatWest Credit Card MasterCard/Visa

24.942%

27.948%

3.006%

NatWest Gold Card Account MasterCard/Visa

24.942%

27.948%

3.006%

NatWest Platinum MasterCard/Visa

24.942%

27.948%

3.006%

Post Office Classic MasterCard

20.94%

24.942%

4.002%

Post Office Platinum MasterCard

20.94%

22.941%

2.003%

Royal Bank of Scotland Classic MasterCard/Visa

24.942%

27.948%

3.006%

Royal Bank of Scotland Gold MasterCard/Visa

24.942%

27.948%

3.006%

Royal Bank of Scotland Platinum MasterCard/Visa

24.942%

27.948%

3.006%

The Co-operative Bank Clear Visa

11.9%

12.9%

1%

Ulster Bank (NI) MasterCard/Visa

22.335%

24.942%

2.607%

Ulster Bank (NI) Gold MasterCard/Visa

19.285%

24.942%

5.657%

Source: Moneyfacts.co.uk 15.7.08

 

Moneyfacts Group
Moneyfacts is the UK’s leading independent provider of personal financial information and our data is used and trusted throughout the financial industry. 

 

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