The old credit card waterbed is back in action. Just as new rules come in that press down on excessive interest payments in one place, we start to see charges popping up elsewhere and penalty rules tightening.
On the plus side, there’s been some great news about credit cards for consumers lately.
The number of competitive deals has been increasing, while the positive order of payment rules (introduced in December) means that your most expensive debt is paid off first.
Sounds unimportant, but it could mean a saving of hundreds of pounds for anyone who has transferred a balance at 0% then used their credit card for new purchases or withdrawing cash.
Unfair increases and added extras
On the downside, though, we’ve had an increasing number of complaints from customers who have had their credit card interest rate increased for no obvious reason.
When challenged for an explanation, credit card companies are replying with variations on, ‘We’ve reassessed your credit rating – check your credit file for details’. In other words, a corporate ‘Nothing to do with me guv, it’s all external factors’.
As we reported last week, there’s a new EU rule coming in next month that means only 51% of successful applicants for a new credit card have to be offered the advertised APR, down from two-thirds previously.
And that’s if you get approved at all – anecdotal evidence suggests that only those with a perfect credit report will be accepted for the best deals. Many of the rest will be encouraged onto near- and sub-prime cards with APRs of well over 20%.
Then there are fees. Recent weeks have seen Santander, for example, introducing a dormancy fee on its Debenhams credit card if you haven’t used it for six months. And with the PPI cash cow now all but dead, it seems that some banks are pushing expensive and usually unnecessary ID fraud protection instead, while others increase their charges for using your card abroad.
How can credit card providers improve?
Have you spotted any other changes to the credit card market? How does your credit card provider squeeze those extra pennies out of you? Let us know and we’ll investigate.
I’d love to hear about any positive changes, yet all too often fees and charges in the credit card market are like the Lernean hydra – chop off one head and it grows two in its place. Mixed metaphors aside, it’s unfair for credit card companies to give with one hand and take with the other and we must be on our guard.