/ Money

The new credit card that charges £15 to spend a penny

A pile of credit cards

Would you apply for a credit card that charges £15 a month to borrow one penny? I certainly wouldn’t. And yet, the new Shout credit card does just that. In fact, it’ll even charge you for not spending.

Unusually for a credit card, the new Shout card from Raphael’s Bank charges no interest or default fees. However, it does come with some hefty fees depending on how much you borrow.

In fact, you’ll have to pay £3.50 even if you don’t spend anything at all. If you spend between one penny and £100, you’ll pay a charge of £15. But spend a penny more than £100? That’ll cost you £30 a month in fees. And so it goes on.

The leap in fees as you tip into the next credit bracket risks encouraging irresponsible borrowing. For example, if I’m buying an item for £101, I might as well spend an extra £99 on my card that month as it won’t cost me any extra in fees. But it may well cause future problems when I can’t afford to repay the increased debt.

What’s the alternative?

If you have a poor credit history, several credit card providers offer cards with an Annual Percentage Rate of up to 40% and no annual or monthly fees. While the interest rate looks high, you can rebuild your credit rating and avoid paying any interest just by clearing your bill in full every month.

The new Shout card card is yet another product of the growing high-cost credit market. And with a £30 monthly fee for borrowing £101, it charges more than most payday lenders. The Shout card also offers unlimited rollovers at payday loan interest rates, further encouraging irresponsible borrowing.

Our report on credit in March found that an increasing number of people are using high-cost credit to pay for daily essentials like rent, food and utilities, with many also using it to repay existing credit. We’re calling for the Financial Conduct Authority to crack down on irresponsible lending across the whole credit market when it takes over its regulation in 2014.

I’m all in favour of mainstream providers developing affordable alternatives to payday loans and fervently hope they will. However, the new Shout card isn’t the answer I was hoping for. Would you be tempted to take out a Shout card?

Comments
Member

Certainly not, In fact they’d need to pay me to take a new credit card. Not the other way round.

Do they still charge shops etc a fee as well ? As I might be tempted to start up my own credit company, charging £14 a month to undercut them.

Who says you can trust financial services companies.

Member

I disagree with the assessment of this article.

If you borrow money on a credit card and are able to pay it off within the month, you incur no fees.

Likewise, if you borrow money on the Shout card and have a positive balance (i.e. non-zero) at the time the statement is processed, YOU INCUR NO FEES !

If you DO incur fees then you have a minimum payment to pay just like a normal credit card. HOWEVER, if you can’t pay this fee on time you incur no penalty charge on Shout like you would with any other credit card.

So, with the Shout card you can borrow £300 and pay off £301 and not pay a single penny in either interest or charges.

Experience shows that the £3.50 charge is only incurred when your balance is zero – this can be bypassed by having a non-zero balance of an overpayment of a pound.

Personally, I can’t get a credit card and I don’t want to take out payday loans. This card is perfect for free borrowing for me.

Member
Derek C Eydmann says:
30 December 2013

So have you used this card in the way you explain and incurred no costs , I have this card and not used it at all just as a emergency back up , I am about to go on a trip to the Caribbean and considering using it but putting it back into positive credit before the next bill date , also overpaying on it to have a positive balance. Do you think this would work. ???

Member
Mr BA Cunningham says:
9 January 2015

Hey what you said in your post is not strictly correct. I’ve had a shout Visa Card with a £300.00 Credit Limit since about November 2013 and you don’t have to pay your account into a positive balance to avoid the charges. Each month I. Use my card right upto my credit limit and then 5 days before my statement date, I pay my balance to zero and when I get my statement it shows zero charges and I have My full credit limit of £300 available for the following month.

Member
Lisa Marie says:
12 March 2014

AVOID this Credit Card like the plague!! Without asking for any permission from you whatsoever, the minute you have simply applied for a card, they STEAL your personal information & pass it on to third parties who CONSTANTLY bombard you with text messages & phone calls! PLEASE… Do not make the same mistake myself & others have don’t touch them with a barge pole!!

Member
Mr BA Cunningham says:
9 January 2015

Hey what you said in your post is not strictly correct. I’ve had a shout Visa Card with a £300.00 Credit Limit since about November 2013 and you don’t have to pay your account into a positive balance to avoid the charges. Each month I. Use my card right upto my credit limit and then 5 days before my statement date, I pay my balance to zero and when I get my statement it shows zero charges and I have My full credit limit of £300 available for the following month.

Member
Mr BA Cunningham says:
9 January 2015

Hey,

I don’t know what experience you have had, but I’ve had my card for nearly 15 months now and I have not received one marketing call from Raphael’s Bank, or any third party that they have passed my details onto.

Member
scott says:
15 March 2014

i cant figure out how to pay my card off
can someone help