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15 October 2007
Many consumers in the UK may be thinking of switching their credit card provider after a number of credit card companies pushed up their rates by up to double for consumers that they classed as being higher risk. Despite not having an record of damaged credit, many consumers have found that their interest rates have shot up simply because the credit card companies have decided that they could pose a risk in the future. Consumers that have been affected are confused and outrages over the credit card providers' decisions.
According to recent reports credit card companies, many of which are still looking at different ways to recoup the losses resulting from the ceiling limit imposed on charges last year, are looking at the accounts of customers to see which ones may start to struggle to keep up with repayments over time. Those with multiple credit cards, high debt levels, and those that make minimum repayments are all being targeted, even in cases where they have always made their repayments on time so far.
One elderly woman explained how the interest rate on her MBNA card had suddenly shot up from 15.9% to 27.9%, leaving her confused and distressed. She stated: 'This doubled interest, coming at the same time as my husband died, is most distressing.' Another credit card customers stated that she had become the victim if inflated rates even though she paid on time by direct debit every month, simply because she made minimum repayments. She stated: 'I pay the minimum by direct debit every month, so I can't miss a payment. I can't understand it. It is so unfair.'
According to one industry professional credit card providers will now take things that didn’t really matter in the past into account when determining what interest rate to offer to a customer. He stated: 'Lenders are already digging deeper to pick up on early signs of over-indebtedness. Credit cards provide early warning signs such as borrowing from one card to pay another or constantly making only minimum payments. This kind of information will have a bigger impact than it would have done in the past.'
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