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By Reno Charlton
News Editor, 18 March 2008
Related Recent News Stories
Fewer credit card providers offering capped transfer fees
It’s become clear over the last year that balance transfer handling fees have been steadily rising from an average charge of 2% to a now more common 3%. On top of this, lenders offering capped maximum fees has also decreased, with only 7 cards now capping their handling fees compared to 18 a year ago.
Are banks closing credit card accounts of the wrong people?
It's been reported that the recent decision of banks such as Egg are in fact closing the accounts of people with excellent credit histories and repayment records in contrast to their statement that the account closures were due to deterioration of credit ratings.
Have you been affected by Egg's decision?
160,000 Egg cardholders have had their accounts withdrawn as the Internet banking giant has decided it no longer wants to offer credit facilities to them. However, in contrast to Egg’s statement of reducing risk - many cardholders on the ‘hit list’ actually have very good credit histories and have never missed a payment.
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MANY people in the UK may soon be looking for an alternative credit card after it emerged that a number of credit card issuers have recently slashed the credit limits of many cardholders.
Credit limits that had been cut, were not reported to the cardholders until afterwards – leaving many people fairly outraged, and in some cases only found out after attempting to use their credit cards only to have the transaction rejected.
Although the move, which is said to be part of a nationwide cull, has been made by a number of credit card providers the same model has been used, where the credit limits of many customers have been cut to just one hundred pounds above their existing balances, which means that their cards are automatically almost maxed out until they make some sort of payment on their outstanding balance.
One credit card holder, a solicitor who originally had a credit limit of five thousand pounds on his card, explained how he had tried to make a purchase only to find that the transaction would not be authorised because his credit limit had been cut to just seven hundred pounds without his knowledge.
He said: "I had to endure the humiliation of having it declined twice in B&Q. There was a long queue behind, I was embarrassed, but luckily had other cards with which to pay it. I have had the card for 10 years and, surprise, surprise, I've never missed a payment and always paid off the balance at the end of the month. But what really made me angry was that after I asked them why they didn't give me some notice, they said that if they did that, I could just rush out and spend wildly in an effort to keep my balance up. I found that incredibly insulting."
This move could see a sharp increase in the number of people looking for alternative credit cards after having their credit limits cut.
Lyndsey Burton from Credit Card Comparison Online stated: "Anyone who does decide to look for an alternative credit card should make sure that they do their homework and find the most suitable card for them, rather than rushing into getting another card which might have high interest rates or fees."
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