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Summer spenders to pick up £7.89bn bill

Tue, 24 Jun 2008 14:54:25 GMT

People in the UK will not have their spending curtailed by the credit crunch this summer and will part with around £7.89 billion, it has been claimed.

According to research from Sainsbury's Bank, 42 per cent of money being spent this summer will be put on credit cars, while 11 per cent of people will put more than half of their bill on plastic.

Consumers expect to spend an average of around £305.90 on purchases such as clothes and electrical appliances in the sales over the period, the research added.

"If you are going to use a credit card in the summer sales, it pays to use one that gives you attractive rewards that are not only easy to collect but also redeem so that you really are earning whilst you spend and getting a little back," commented Sainsbury's Finance head of cards Donald MacLeod.

Research from money charity Credit Action has found that the UK is in personal arrears of more than £1.3 trillion.

£1.1 billion 'switched between credit cards each month'

Tue, 1 Apr 2008 15:49:27 GMT

People in the UK will attempt to transfer close to £1.1 billion across credit each month, it has been claimed.

According to statistics from Sainsbury's Bank, an estimated 280,833 people will be looking to switch up to £500 between cards, while those moving more than £5,000 total over 30,000.

The body revealed that the average amount transferred is around £1,555 with one in ten looking to switch more than £4,000.

Donald MacLeod, head of cards at the organisation, said that there are a number of tempting offers on the market for those looking to switch,

"There is a significant market for cards offering balance transfers as our research indicates that 40 per cent of card holders think it will take longer than one month to clear their current balance," commented the official.

Money charity Credit Action has estimated that the current amount of personal debt in the UK totals more than £1.3 trillion.

Brits 'gave £1bn on cards last year'

Fri, 14 Mar 2008 16:26:57 GMT

People in the UK made £1 billion-worth of charitable donations through their credit cards over the course of 2007, it has been claimed.

According to payments association Apacs, this is a 23 per cent increase on the 18.5 million contributions made during 2006.

This week's Budget left gift aid at 22 per cent, but Apacs director of communication Sandra Quinn believes a lower rate in the future means Britons should continue to be as generous as possible.

She said: "Last year we donated a staggering £1 billion on our cards and it seems very likely that our increasing preference to pledge by plastic has been spurred on by all the growing opportunities to pay online or over the phone."

In 2006, rock star Bono launched Product Red - a brand which gave a share of its profits to the fight against Aids in Africa.

Don't use card abroad this Valentine's Day, says Nationwide

Fri, 8 Feb 2008 16:27:25 GMT

Couples looking to celebrate Valentine's Day abroad this year have been warned not to spend more than they need to by a high street bank.

According to Nationwide, using a credit card in a foreign country can carry an unwanted cost for consumers.

It explains that most lenders charge people around three per cent for using plastic abroad, with people in the UK paying around £27 million in charges last February.

Divisional director at the bank, Jeremy Wood, stated that people heading away for a romantic break should make sure that they are aware of the conditions that come with using their cards in advance.

"Couples who are planning to go abroad for a romantic getaway this Valentine's Day should be aware of the hidden charges that most card providers impose, which are both costly and unnecessary," he said.

Valentine's Day is the second most popular day on which to send a card, after Christmas.

Christmas expenditure 'expected to be cleared within a month'

Tue, 15 Jan 2008 13:13:34 GMT

Consumers in the UK believe that they will clear the debt they accumulated over the Christmas period within a month, it has been reported.

A survey from Sainsbury's Bank show that 61 per cent of people think this way, with 15 per cent stating that they will pay it off in two-to-three months.

The research also found that there are 438,000 people (one per cent) who expect the debt will take over a year to clear, while 12 per cent do not know when they will be free of it.

Sainsbury's head of cards Donald MacLeod commented that close to nine million people put their Christmas expenditure on plastic.

He said: "We estimate that around 18% of Christmas spending was placed on credit cards."

This comes as supermarket giant Tesco has reported that revenue over the Christmas period stalled against the previous quarter.

Review finances, consumers urged

Wed, 2 Jan 2008 15:11:25 GMT

Credit card customers should shop around for the best deal on their plastic in the new year, according to an industry expert.

Sainsbury's Bank head of cards Donald MacLeod said that reviewing one's finances is "the key thing" in order to manage money in 2008.

"Find where the best deal is for you and take advantage of those deals," he said.

According to Mr McLeod, consumers should compare their credit card deal to those that are available from other providers.

"That may well offer you an opportunity to reassess your costs," he said.

Payments organisation Apacs predicted that British consumers would spend some £53 billion over the festive period, with 64.3 per cent of that charged to credit cards.

In 2006 as a whole, British consumers spent £159.8 billion on plastic, with £61 billion of that going on credit cards and other charge cards.

Cheshire Building Society also urged Britons making New Year's resolutions to prioritise their personal finances.

The financial services provider said: "If you have a mortgage, it is always worth shopping around in case there is a better deal available."

Cardholders plan £9bn switch

Mon, 31 Dec 2007 15:10:29 GMT

Credit cardholders intend to move almost £9 billion worth of debt in the first quarter of 2008 by taking advantage of balance transfer deals, the findings of a new survey have revealed.

The study, commissioned by Abbey, discovered that more than three million borrowers plan to move credit card balances, with the average amount they want to transfer £2,666.

Roger Lovering, managing director of Abbey Credit Cards, said the figures were a positive sign that consumers are taking steps to get their finances in order and ensure they are paying less interest.

He added: "January credit card bills can often catch people by surprise, so we would encourage people to … plan ahead to ensure they aren't paying over the odds for their plastic."

Switching to a lower or zero per cent interest deal can help borrowers to save money, but Samantha Owens of personal finance website Moneyfacts.co.uk recently advised consumers to think carefully about the impact of balance transfer fees, as many lenders have increased them in recent times.

Apacs: 86% young people use plastic

Fri, 28 Sep 2007 16:48:16 GMT

Apacs, the UK payments association, has revealed that 86 per cent of those aged 18 to 24 hold a plastic card of some kind.

It has published research which reveals only 37 per cent of 18 to 24-year-olds hold a credit or charge card, which compares to a national average of 66 per cent of adults.

Those in that age group who do hold such cards have an average of 1.72, compared to 2.3 for all adults.

Sandra Quinn, director of communications at Apacs, said: "Being able to manage their personal finances is one of the most important life skills a young person can acquire."

Apacs is publishing a series of consumer advice guides aimed at simplifying finances.

Credit Action, a UK debt advice charity, reports that in any one day there are 24.5 million transactions worth a total of £1.4 billion made using plastic cards.

It reports the average amount of consumer borrowing via overdrafts, credit cards and loans stood at £4,515 per British adult at the end of July.

Cashback 'feature held most dear by consumers'

Wed, 26 Sep 2007 12:46:54 GMT

A cashback option has been named the most desirable feature for consumers taking out a credit card, according to new research.

Findings from Abbey have indicated that 20 per cent of card holders commented that they value this facility the most.

Next came low APR, something which 16 per cent of consumers looked for when taking out a card, it added.

However, there was considerably less interest in taking out a card with a charity affiliation as one per cent named it desirable.

According to Roger Lovering, managing director of Santander Cards, the feature may be particularly useful to those consolidating their cards.

"In the current climate, people are becoming more and more savvy about the impact numerous cards have on their credit rating and a significant number of cardholders are now looking to consolidate all their credit cards," he said.

Meanwhile, research from money charity Credit Action has indicated that the UK has a personal debt bill over £1.3 trillion.

Cutting up cards 'first step to debt recovery'

Wed, 8 Aug 2007 16:01:21 GMT

Making sure they cut up credit cards may be the first step for many towards complete debt recovery, it has been claimed.

According to Mint Financial Services, a person can only resolve not to accumulate further arrears once they have chopped up the plastic.

The firm pointed out that there were a number of long-term problems involved in having debt - including interest on top of the cost of the original purchase.

Debts can be far-reaching and have serious consequences on later life, stated company spokesperson Adrian Kidd.

"You can be penalised for applying for a lot of credit in the last 12 to 24 months. Sometimes you can actually be turned down for a mortgage based on that," he said.

Consumer credit lending totalled £214 billion in June 2007, according to Credit Action.

This marks a 5.2 per cent increase on the same month in 2006.

Consumers urged to consider overseas credit card charges

Fri, 20 Jul 2007 12:22:36 GMT

Many people planning to use their credit cards while on holiday abroad are unaware that they could be charged additional fees by the provider, according to a new report.

Research by the Post office found that 47 per cent of holidaymakers do not know that they will be charged an average of 2.75 per cent for each transaction they make overseas.

Additionally, 34 per cent of those surveyed thought their provider did not charge fees, despite only two cards available on the market that do not.

Gary Fitton, head of lending at the Post Office, said: "It's shocking not only to see how much people are being penalised to use their cards on holiday, but how few are aware of this."

Holidaymakers should check whether they'll be subject to fees with their card provider before they go away, he advised.

A spokesperson for the UK payments association Apacs recently suggested that more people were using credit cards abroad rather than travellers cheques because they are more convenient.

Card firms recoup £50m in penalty fees

Mon, 16 Jul 2007 11:55:04 GMT

Revenue generated by credit card penalty fees for missed payments reached £50 million during the past six months, according to new research.

A study by MoneyExpert.com found that as many as 4.1 million monthly payments on credit cards were either missed or were late during the first half of the year, with many lenders charging £12 for each missed payment.

Sean Gardner, chief executive of the firm, said that if someone is already struggling to afford their regular bills, penalty charges create additional financial pressure.

"Anyone in trouble needs to take action now because the situation will only get worse if they bury their heads in the sand. They need to get their debts under control and cut their spending," he remarked.

The UK's payments association Apacs, recently reported that £321 billion was spent on plastic cards in 2006, with this form of payment now accounting for nearly a third of all consumer spending.

Using credit cards abroad is 'more financially secure'

Mon, 9 Jul 2007 17:04:11 GMT

While many people find credit cards more convenient than travellers cheques when making purchases abroad, one expert has claimed that using a card is much safer as well.

A spokesperson for the UK payments association Apacs said that in many countries the only way to cash travellers cheques is by queuing at a bank, whereas credit cards are accepted in most places.

The use of the chip and pin system in UK means that most card users are becoming far more aware of the need for security, but a number of countries have yet to employ the same technology meaning the risk of fraud is higher, the spokesperson suggested.

"The good news is that if you're the victim, your bank will give the money back," she said.

"I think that's another reason why people use cards – because they know they don't lose out financially."

Earlier in the month, Apacs reported that £321 billion was spent on plastic cards in the UK last year, meaning cards now account for nearly a third of all consumer spending.

Credit cards 'picked by brand'

Mon, 25 Jun 2007 15:46:11 GMT

A person is more likely to take out a credit card if they are impressed by the brand behind it, it has been reported.

Some eight out of ten are likely to put company recognition before any other factor when picking up new plastic, according to a Motley Fool reported.

While brand awareness may seem like a superficial attraction to taking out a card, two out of five are happy with the service they get from the credit providers they pick.

But David Kuo, the Motley Fool's head of personal finance, has warned the industry that it must take care of its customers.

"It must stop talking of introducing annual fees for low-usage customers, which sends out the wrong message to sensible consumers," he said.

This news comes as research from money charity Credit Action shows that the UK has amassed a personal debt mountain of £1.3 trillion.

Rewards 'not being picked up by credit card customers'

Tue, 12 Jun 2007 15:35:21 GMT

People signing up for credit cards may not be taking advantage of the rewards being offered to them, it has been reported.

According to the Post Office, 60 per cent are not picking up the features originally packaged with their cards.

Of the deals that may be on offer, low interest rates and zero per cent on purchases and balance transfers were the most popular among those surveyed, it added.

But it found that cashback deals only yielded people an average of £37 and 49 per cent of customers did not pick up any reward at all - something they should investigate, according to managing director Alan Cook.

"We urge credit card holders to look at the long-term value offered by their credit card particularly as almost a third (32 per cent) credit card users have held their card over five years."

People looking to ease the pressure on their finances may look to a personal loan as an alternative to a credit card.

Showing restraint 'will cut credit card debt'

Thu, 22 Mar 2007 15:26:45 GMT

People who show restraint when paying off their credit cards will wash away their debt, according to a consumer finance organisation.

Moneyextra has claimed that simply stopping spending on plastic will see consumers have an immediate impact on their bills, while a zero per cent card can also make a large dent.

Budgeting is also a useful technique for those looking to clear their accounts, with a reasonable amount of money set aside for spending keeping people on track to wipe out debt, it added.

But those with savings and debt may be making a mistake, as the company suggested that money in such accounts could be used to pay off more than the minimum amount each month, thus further cutting costs.

Meanwhile, uSwitch.com has revealed that withdrawing cash on a credit card has high costs perhaps unknown to consumers.

Rates up to 27.06 per cent were reported.

Card fraud 'slashed' through chip and pin

Wed, 14 Mar 2007 18:55:26 GMT

The successful rollout of chip and pin technology has seen a dramatic reduction in card fraud, having improved the security of credit card transactions for consumers in the UK.

Figures from APACS highlight a steady decline in card fraud, believed to be the result of a wide uptake of chip and pin. In total, card fraud losses fell from £439.4 million in 2005 to £428 million last year while losses at retail outlets fell by 47 per cent.

Experts maintain that this is strong evidence of the success of chip and pin in reducing fraud, further supported by the fact that card-not-present credit card fraud has increased by 16 per cent. Sandra Quinn, director of communications at APACS, singles chip and pin as a key factor in tackling fraud.

"Chip and pin has had a hugely positive effect on fraud losses over the counter in UK shops and stores, but we are seeing more fraud on transactions that do not use chip and pin," she stated.

Chip and pin celebrated its first birthday last month, having been in operation for one year. Since then chip and pin credit cards have grown to represent 97 per cent of all payment cards in the UK.

Morgan Stanley: Credit spending more clever

Wed, 24 Jan 2007 16:38:58 GMT

The amount of money being spent on credit cards from January to March this year will increase, according to Morgan Stanley.

Britons will spend an average of £1,228 on plastic in the first three months on the year, compared to £730 in 2006, the body states.

However, credit cards are now being used more for household spending and groceries, accounting for 59 per cent of transactions - with traditionally larger purchases such as holidays following behind, the group reported.

The global finance firm believes the increase is due to consumers becoming "increasingly clever" in managing their debt.

"The results of our research show an increased confidence in the use of credit cards as a financial aid. It is encouraging to see that people are using their credit cards sensibly, with credit card spending and repayment figures increasing in tandem," said Patrick Muir, Morgan Stanley marketing director.

In November 2006, consumer money charity Credit Action claimed the amount of personal debt in the UK is increasing by £1 million every four minutes.

Women with expensive handbags 'vulnerable to crime'

Wed, 10 Jan 2007 16:34:19 GMT

Many British women risk falling victim to crime by carrying expensive items in their handbags, according to an insurance firm.

A study by Cornhill Direct found that one in five British women have either lost or had their handbag stolen, which often contains high-value possessions.

Figures from the firm showed that the average handbag is worth around £300, as women often opt for a designer label and carry items such as cash, a mobile phone and MP3 player.

Mark Bishop, spokesman for Cornhill Direct, urged those who carry handbags to be aware that they are a "prime target" for thieves.

He said: "Try not to carry around important documents and take sensible precautions to minimise the risk of theft, particularly in bars and restaurants."

Mr Bishop added that losing or having a bag stolen is not only extremely stressful but can also leave women open to identity theft, as they often contain personal details.

Cornhill also listed other items that can increase the value of the average handbag, such as a make-up bag and its contents, a purse, diary and an umbrella.

No-swipe credit cards 'linked' with identity theft

Tue, 5 Dec 2006 15:28:12 GMT

The latest innovation in banking has the potential to make customers susceptible to identity theft, experts warn.

According to Charles Schumer, a US senator believes that credit cards equipped with RFID (Radio-frequency Identification) chips are not sufficiently and leave the consumer open to theft from criminals, without anything being physically stolen.

"All you need to be is within a couple of feet of the customer," said Senator Schumer.

"You may as well put your credit card information on a big sign on your back," he added.

So far, over ten million RFID-equipped credit cards have been issued, and manufacturers insist that encryption levels match those used on traditional magnetic strips.

However, the senator believes that thieves could steal data simply by arming themselves with mobile RFID readers.

RFID chips are currently used in a number of applications, including passports, transport payment systems and animal identification.

Credit card spending spikes in July

Thu, 31 Aug 2006 17:01:15 GMT

The amount of money spent on credit cards has risen sharply in July, despite the month's historical low credit borrowing, according to moneyextra.com.

Last month's average balance, at £2,933, is the highest figure recorded in six months and is a 10.6 per cent rise on the outstanding average credit car bill for June.

The Bank of England's latest figures say that lending as a whole increased by £0.2 billion compared with a £0.1 billion increase in June.

Consumer credit borrowing for July fell in both 2004 and 2005 but this year, possibly due to the record breaking scorching weather across the country, personal card debt actually increased.

Robin Amlot, of Moneyextra, said that the increase is likely to continue this month. "Outstanding credit card balances have risen by almost 20 per cent since April and they are set to rise further; with holiday costs, back to school costs and year-end festive spending to come.

He added: "It's more important than ever than people make sure they have the right credit card for their circumstances."

Prior to this summer, Brits had been reigning in their notoriously high credit spending as outstanding credit card balances fell from a peak of £3,527 in April 2005 to a low of £2,459 in April this year.

Cash machine fraud on the rise

Wed, 30 Aug 2006 16:15:37 GMT

Cash machine fraud has risen by an alarming average of 37 per cent a year between 1996 and 2005, according to Sainsbury's Bank.

Some £65.8 million was lost to card fraud in 2005 compared with just £21.2 million only five years ago.

Due to the growing problem, Sainsbury's Bank has announced that it is to invest an extra £3.5 million on security around its 885 cash machines. This money will be spent on extra CCTV cameras and anti-skimming devices, which are leading the fight against the growing practice of affixing a contraption onto the cash machine that copies the details of the customer's card without their knowledge.

But a spokesperson for APACS said that there are systems in place to cope with the onslaught of fraud.

"If we have huge instances of fraud in certain areas we have an intelligence system to alert banks. If they are developing systems they know what they are having to cope with," said Sandra Quinn.

She added that overseas transaction will continue to carry more risk than those at home, warning that "some foreign cash machines have not yet implemented chip and pin technology".

Customer are advised that they should be vigilant when taking out cash from and report anything that looks suspicious.

Nationwide card users happiest, Barclaycard most vexed

Mon, 31 Jul 2006 17:05:31 GMT

Nationwide customers are the most satisfied with their credit cards while Barclaycard customers are the least content, new research has shown.

More than nine out of ten - 91 per cent - of Nationwide's customers say that they are happy with the service they receive, compared to two-thirds of Barclay customers.

Amex, Co-op, Goldfish, M&S Money, Morgan Stanley and Tesco all followed close behind Nationwide each receiving overall ratings of 88 per cent.

"It is no surprise to see Nationwide doing so well in a survey of this nature," said Nick White of uSwitch, who compiled the survey.

"For some time now they have positioned themselves as a champion of banking consumers' interests, campaigning on issues ranging from ATM fees to the order of repayments on credit cards, and fees for customers who use their credit card abroad.

"In keeping with the old adage of 'practising what they preach', this survey shows that Nationwide are doing a good job of looking after their own customers."

More than 10,000 card-holders were interviewed during the research. Lloyds, MBNA and Capital One all appeared low down on the poll alongside Barclaycard.

Lower minimum payments means twice the interest warns research

Fri, 28 Jul 2006 17:03:59 GMT

A widespread shift in the credit card industry towards lowering the minimum level that has to be paid back monthly may seem like a good thing at first glance.

But new research has warned that the reduction now down to as low as two per cent across 50 credit cards is extending our debt and the overall interest that we pay.

Paying just one per cent above the minimum level will slash the lifetime of a debt by 14 years, said Nick White of uSwitch, which conducted the research.

"Our investigation indicates that as credit card debt has gone up by £7 billion over the last two years and Britain's personal debt increases by £1 million every four minutes, lenders have simultaneously become less stringent about their repayment requirements," he said.

"By reducing the minimum repayments to a level that make credit cards seem more affordable and allowing customers to repay smaller amounts each month, borrowers are retaining their debt over a much longer time frame and paying more interest."

The total interest payable over the lifetime of the credit card balance can also be halved by just paying three per cent instead of the minimum two, said uSwitch.

Beware balance transfer credit card trap says survey

Thu, 27 Jul 2006 09:54:31 GMT

Balance transfer credit card users are paying on average ten per cent above the best rates available, to them claims a new survey.

Around 75 per cent of the credit card debt in the UK is subject to interest payments and many people find it more convenient to pay rather than chase zero per cent deals.

Excluding zero per cent offers, the market holds a massive variation in rates.

Moneyfacts says that the new Barclaycard FlexiRate credit card is the best balance transfer credit card for those who are tired of regularly switching providers.

"The new deal, tops the best buy charts offering 4.9 per cent PA until the balance is cleared for any balances under £5,000," said Andy Britchford of Moneyfacts.

"But beware, as with many cards, you will be required to pay a balance transfer fee, in this case 2.50 per cent. So on a balance of £5,000 this would cost you £125.

"However, with interest rates predicted by some, to rise later this year, it may well be worth paying the fee in the knowledge that you won't be charged any more than 4.9 per cent until your card balance is completely cleared."

Virgin balance transfer offer 1 year 0% interest

Mon, 17 Jul 2006 17:02:43 GMT

The Virgin Money balance transfer credit card will now offer 12-months interest free on all transfers, up from its previous offer of nine.

The balance transfer credit card will also supply three months zero per cent interest on all new purchases, rising to a standard variable rate of 15.9 per cent.

Virgin Money warned that the standard variable rate is subject to previous credit history and may be higher for some borrowers, however.

In addition to the zero per cent offers, card users will be able to earn Virgin Member Shop reward points, to be redeemed for goods and services with the Virgin Group.

Interest free will never die but it will fade away

Mon, 26 Jun 2006 17:48:33 GMT

Just six credit cards offering interest free periods on new purchases for longer than ten months are left on the market, claims Sainsbury's Bank.

Overall, 66 credit cards offer interest free periods on new purchases with an average term of 196 days, or six and a half months.

"There is a huge choice of cards offering interest-free periods on purchases, but the length of these varies a great deal," said Donald Macleod, credit cards manager at Sainsbury's Bank.

Six offer three months or less, 12 offer between four and five months interest-free and 14 offer a seven to nine month term without interest charges.

While balance transfer credit cards may offer longer periods on older balances, new purchases are slipping to as low as three months in some cases.

Balance transfer credit cards are also becoming more constrictive however, with two fifths of cards charging a fee of up to three per cent of the balance.

£500m profit from balance transfer credit card deals says research

Fri, 9 Jun 2006 17:08:32 GMT

Credit card providers are running a profit margin of around £500 million every year on balance transfer credit card deals and other introductory offers, says Nationwide.

The fat-profits are due to the providers charging variable rates for different types of spending and almost inevitably paying off the cheapest form of credit first.

On balance transfer credit card deals for instance, the sum transferred would be left until any additional purchases – at a higher rate of interest – had been paid for.

This costs the average card user £100 every year in additional interest charges, Nationwide has estimated.

"Many credit card providers use low introductory rates to lure people into opening an account," said Nationwide executive director Stuart Bernau.

"These offers can look very appealing, but when you scratch beneath the surface you discover that credit card holders often don't receive the full benefit of these low rates.

"Most providers apply repayments to the cheapest debt first making it more expensive for you and more profitable for them.

"We call on the industry to play fair by consumers and apply repayments to the most expensive debt first."

Nationwide, alongside Saga and Liverpool Victoria, is one of the few card providers who pay off more expensive credit first.

Big four high street banks fold over excessive penalty fees

Thu, 1 Jun 2006 18:13:25 GMT

Barclaycard, Lloyds TSB and HSBC have all said that they will not contest the Office of Fair Trading's (OFT) order that they must slash their credit card penalty fees.

The announcement means that the banks will now be limited to charging penalties of a maximum £12 for overdue payments or unauthorised credit card borrowing.

Consumer protection group Which? has said that the decision is a victory for card users.

"Which? is pleased that these providers have acknowledged that their credit card charges are too high," said Doug Taylor of Which?

"We welcome their decision to cut the charges and hope other banks and credit card providers follow suit.

"Earlier this year, the Office of Fair Trading said that the suggested £12 charge may not necessarily be fair, but that anything above £12 is likely to be unfair.

"So, we still do not know whether the £12 actually represents a fair charge and repeat our call to all providers to open their books to scrutiny and show the true costs involved."

Which? also warned that fees of up to £35 will still be applied to current accounts and asked people charged to keep up pressure on banks by challenging the charges.

Am-Ex forced to apologise over balance transfer credit card fiasco

Tue, 30 May 2006 17:14:55 GMT

Red-faced American Express bosses have been forced to apologise after mistakenly offering customers zero per cent balance transfer credit card offers for life.

Thousands had already transferred cash to their American Express cards by the time they found that the offer was actually for six months free balance transfer credit card deal.

The offer was posted to three per cent of the company's UK customers. Details of the offer were also confirmed in the small print.

"I understand banks don't usually offer free loans, but the offer was in black and white," disgruntled customer Richard Morris told This is Money.

"Does Amex have any rights to alter the offer when I have complied with every one of its details?"

Mr Morris had already cleared £1,000 off his American Express card and transferred almost £8,000 from other cards when he was informed of the mistake.

Credit comes in from the cold

Mon, 22 May 2006 17:21:23 GMT

The widespread availability of cash back credit cards and low interest credit card deals is driving the use of plastic for everyday purchases, says research by Morgan Stanley.

Mundane purchases such as groceries and petrol now make up 55 per cent of all credit card spending – a far cry from the days when credit cards were used as a last resort or to spread the costs of large items.

"Credit cards have changed enormously over the years and so has the way that people use them," said Patrick Muir, marketing director, the Morgan Stanley credit card.

"Savvy credit card customers are taking advantage of credit card incentives and beginning to use their cards more and more for everyday purchases.

"Britons are increasingly more likely to shop around and see how they can be rewarded for their spending with loyalty schemes such as cash back, in addition to taking advantage of the interest-free period that many cards offer."

Everyday spending charged to credit cards has increased by 11 per cent over the last six months and will continue growing, claims Morgan Stanley.

Almost £12bn switched every 6 months on balance transfer credit card deals

Mon, 8 May 2006 17:09:18 GMT

Almost £12 billion is due to be juggled on zero per cent finance and balance transfer credit cards over the next six months alone, research by Capital One has claimed.

Almost six million credit card holders are due to switch an average £2,601 each between low cost and balance transfer credit cards and back again over the period.

"Around 57 per cent of credit cards offer zero per cent interest on balance transfers, but people switching balances to these cards need to choose carefully because the length of interest free periods varies dramatically," said Justin Basini of Capital One.

"For example, nearly four out of ten of these cards have zero per cent interest balance transfers that last for six months or less, which may not be long enough for some people."

Just two-fifths of card users manage to clear their interest within the six-month span of the average low-cost or zero per cent finance deal, with an average period of ten months.

Just over ten per cent managed to clear their debts between seven and nine months, while 27.2 per cent took between ten and 12 months and 4.2 per cent took between 13 and 18 months.

Sainsbury's launches longest 0% card

Tue, 11 Apr 2006 17:22:47 GMT

Sainsbury's Bank has launched a new credit card offering the longest zero per cent period currently available in the UK, with nothing to pay on purchases for a year.

Card users will have to hurry however, as applications are only being taken up to May 31st. After 12 months the card reverts to 15.9 per cent APR.

Sainsbury's are also advertising the product as a balance transfer credit card, with no fees and 5.94 per cent to pay on money transferred.

"With that unbeatable zero per cent rate this is an excellent card for purchases but consumers should be wary of the payment hierarchy applied to balance transfers," said Robert Kenley of Moneysupermarket.

"The 5.94 per cent rate only applies to balance transfers made within the first six months.

"So, for consumers with a large balance to transfer I would instead recommend the Halifax One card, which, though it has a balance transfer fee of two per cent (minimum £2) offers a balance transfer rate of zero per cent for 12 months," he added.

Analysts warn of death of 0% balance transfer credit cards

Fri, 7 Apr 2006 17:08:32 GMT

Credit card providers are likely to respond to Office of Fair Trading (OFT) demands on fees by deciding that zero per cent balance transfer credit card deals are no longer economical.

The OFT ruled that the fees charged by credit card companies for missed payments or unauthorised withdrawals are set far above what is "legally fair".

Users are typically charged around £25, although often more than this, for relatively minor transgressions.

The OFT has ruled that fees of more than £12 should be considered excessive and that even when set at this level they must be justified by the costs incurred.

The fees have provided a large amount of credit cards' revenue however, and one response to the ruling may be the end of balance transfer credit card deals, said analysts.

"The vast majority of cards charge £20 or £25 for default payments so this ruling is likely to have a major impact on the revenues of credit card companies," said David Black of analysts Defaqto.

"To compensate for this we can expect some of the benefits offered with credit cards to be further reduced. This may also impact upon the availability of zero per cent introductory offers and will increase standard interest rates further down the line."

Balance transfer credit card users warned on small print

Mon, 27 Mar 2006 17:43:31 GMT

Borrowers using balance transfer credit cards have been warned that they must scrupulously read the small print to avoid unexpected fees, say finance advisors.

As with so many financial offers, balance transfer credit cards should look beyond the headline rate if they want the best deal, says a Moneyfacts report.

This is particularly true if a balance transfer credit card is used for new purchases and not just for juggling cash, it said.

These can in some cases be paid off separately and accruing a high rate of interest, said Andrew Britchford, credit card advisor at Moneyfacts.

He cites the Capital One platinum balance transfer card, which offers 15 months zero per cent interest on balance transfers.

One of the conditions of purchase is at least £100 of purchases on the card – which will not be covered until the balance transfer is paid off, while earning Capital One 15.9 per cent interest.

"This may only seem a small amount, but when paid by all customers and sometimes on much greater amounts, it will soon mount up," said Mr Britchford.

"Combined with an uncapped two per cent balance transfer fee, this is a potentially lucrative area for lenders," he said.

Other balance transfer cards with similar arrangements are supplied by HSBC, Nationwide BS and Liverpool Victoria.

Store cards overcharging by 20% says report

Tue, 7 Mar 2006 17:30:34 GMT

Britons who choose to put spending onto store cards are routinely paying 20 per cent too much in interest, the Competition Commission has said.

The finding is part of a major survey that the watchdog has carried out into the cards, concluding that choosing store cards over low interest credit cards consumers are collectively spending £55 million too much every year.

It has recommended that stores are forced to warn consumers of the costs when they apply, permit borrowers to pay off lending via direct debit and sell payment protection insurance separately.

Stores which charge interest above 25 per cent should also be forced to tell borrowers that cheaper borrowing is available elsewhere.

"Store cardholders who take up credit and associated insurance pay too much," said Competition Commission deputy chairman Christopher Clarke.

"Specifically, we estimate that for the period 1999 to 2003, APRs have been some ten to 20 per cent above what they would have been had they reflected providers' costs across the sector as a whole, including a reasonable return on capital.

"Thus, average sector APRs have averaged some 26.5 per cent compared with our calculation for cost reflective APRs of some 22 to 24 per cent."

Consumer groups have claimed that the commission's recommendations do not go far enough however, saying that anyone paying 25 per cent is already being charged ten per cent too much.

UK misses £2.8bn on balance transfer claims IF

Thu, 23 Feb 2006 17:48:28 GMT

British credit card borrowers could save £2.8 billion pounds if they switched to lifetime balance transfer credit card deals, according to internet bank IF.

Launching its own lifetime balance transfer offer, the company said that card holders would save £226.85 on a balance of £1,700, paying £50 a month at IF's rate of 4.9 per cent.

The low rate balance transfer credit card offers zero per cent on new purchases for the first eight months, and 16.9 per cent afterwards.

The card will appeal to individuals who want to keep cheap rates but are too busy to constantly switch.

"Our new card provides peace of mind for people who want to manage their credit card debt in a cost-effective manner," said IF's managing director Nick Robinson.

"Our market-leading lifetime balance rate will help customers manage their finances more intelligently and allow them to save hundreds of pounds over several years."

However, IF is not the only provider of lifetime balance cards. Moneysupermarket said that American Express's own lifetime balance rate of 4.9 per cent competes well with IF's offer, but does not offer a zero per cent introductory period.

Consumers opting to switch credit cards

Thu, 9 Feb 2006 14:48:42 GMT

Britons are still switching from card to card in search of the latest deal, according to figures from Moneyfacts.

The money information firm said that 36 per cent of consumers admitted that they switched cards three times to follow zero per cent deals, despite a number of banks claiming to clamp down on the practice by ending attractive introductory rates.

Rate tarts were warned, however, that failing to make timely repayments on a large balance – even if has been moved from card to card – could leave you with significant fees. Over 30 per cent said that they had been hit with late payment costs.

Emma Butler, editor of Moneyfacts.co.uk, said: "A late payment can incur a £25 charge that can then push the borrower over their limit and incur another £25.

"While these charges are imposed to ensure borrowers keep within their limits and make regular payments to control their debt, in some situations it can mean that those who have found themselves in difficulty can see the situation spiral out of control."

The survey also discovered that over half of all British consumers do not receive the advertised APR after applying for a personal loan.

Credit card comparison 'almost impossible' says Which?

Thu, 2 Feb 2006 16:56:26 GMT

Making a realistic comparison of credit card deals is all but impossible as many credit card companies do not clearly explain how they calculate interest, Which? has claimed.

While comparing different types of card, such as balance transfer credit card deals or cashback credit card offers is feasible, trying to discover their relative costs is more complicated.

Which? uses the example of credit card companies cahoot and HSBC. While the cahoot card is advertised as charging 11.8 per cent, it actually costs more than the 13.9 per cent HSBC deal.

This is due to when the interest is calculated from, says Which?. While the HSBC card calculates interest from when the seller receives payment, the cahoot card charges from the moment of sale - typically a few days previously.

"It's ludicrous that a card with a lower interest rate can cost more than one with a higher rate. Which? wants credit card companies to use one standard way to charge interest so consumers really can choose the cheapest card," said Which? editor Malcolm Coles.

Visa reports 1.4m cards canned in 2005

Fri, 27 Jan 2006 17:19:21 GMT

Visa Card is reporting that the amount of money spent on its licensed plastic has declined for the first time ever.

The amount spent on Visa credit cards declined by three per cent, or £2.7 billion, to £85.2 billion in 2005.

Almost 1.5 million Visa credit cards have also been cut up by borrowers over the past year.

The credit card provider will not be panicking just yet however, as it still has 42 million cards in circulation in the UK.

Other credit card companies such as Mastercard are also believed to be suffering under similar figures.

In contrast, debit cards have experienced a surge in popularity, with the numbers issued leaping by 21.3 per cent to reach 47 million through 2005.

The total spent on these cards also increased by 30.5 per cent to £187.6 billion.

The results have been interpreted as a belated backlash against the "spend now, think later" approach to credit.

"There has been quite a shift in consumer behaviour," said Paul Radford of payment service Apacs.

"People are reluctant to get into debt. This is a message which is getting through to consumers.

"People are much more inclined to spend money from their bank current account through a debit card than spending and borrowing through a credit card."

Cashback credit card joins the endangered list

Mon, 16 Jan 2006 16:59:40 GMT

The cashback credit card is becoming endangered, if not heading towards all out extinction, say credit card advisors.

The comments follow the news that Nationwide building society will be dropping its cashback credit card offer.

Cashback credit cards return a percentage of money spent on the card as a tax-free bonus.

Advisors warn that the number of cards out there and the rates they offer are falling at an alarming rate.

"It is now becoming increasingly difficult for customers to find a card which offers them the kind of cash-back benefits that were common place at the beginning of 2005," said financial advisor Samantha Owens.

"Not only have we seen cash-back deals severely cut or withdrawn, but other incentive schemes such as Nectar points and AirMiles are also less widely available.

"With zero per cent interest deals costing the credit card industry dearly and the impact of personal bad debts starting to bite, it's not surprising to see providers taking action to reduce their costs," she added.

Credit card users prepared to compare rates to find the best rate will still be able to find some good deals said Ms Owens, but that they are fewer and further between than ever before.

Nationwide withdraws cashback credit card

Mon, 9 Jan 2006 16:57:42 GMT

The walls began coming down on yet another branch of credit card offers today with the news that Nationwide is to withdraw its cashback credit card from new business.

The cashback credit card will begin to be withdrawn from service from Wednesday, with Nationwide saying that it wishes to concentrate on its classic card instead.

The Nationwide decision on their cashback credit card follows decisions by the Bank of Scotland and Halifax to withdraw their cashback credit card offers last year, while Egg reduced its cashback credit card option from 0.5 to 0.1 per cent in August.

American Express, Alliance and Leicester and Sainsbury's Bank have also all slashed their cashback credit card rates over the last year.

"We have seen a number of issuers withdraw cashback credit card benefits over the past few months. It seems they are becoming more reluctant to give customers something for nothing," credit card advisor Samantha Owen told ThisisMoney.

"Morgan Stanley currently offers the best rate for customers looking to take advantage of cashback credit card deals. It offers two per cent for the first £2,000 and one per cent after.

"American Express' blue card offers two per cent for three months, 0.5 per cent for the first £2,000 and one per cent after that," she added.

BskyB resurrects the long running 0% card

Fri, 23 Dec 2005 17:04:32 GMT

BSkyB and Barclaycard have teamed up to launch a 12 month interest free balance transfer credit card.

The SkyCard, which can be slotted into a TV to allow users to purchase goods through their Sky box, will offer zero per cent interest on all balance transfer credit card transactions.

The launch fills a much missed hole in the market following Capital One's decision last week to withdraw its 2007 balance transfer credit card deal from general use.

The SkyCard will suit purchases more than transfers, as it has a downside of an uncapped 2.5 per cent balance transfer fee. The standard APR is set at 16.9 per cent.

Mark Duckworth, general manager at SkyCard, said: "Predictions of the end of zero per cent deals are premature. This new offer is the longest zero per cent deal on purchases currently available.

"Customers can take care of their Christmas finances with this balance transfer and look forward to a whole year of interest free shopping."

Credit card users devoted to their plastic

Thu, 8 Dec 2005 19:03:00 GMT

Far from being the nation of bed hopping "rate tarts" that credit card companies try to paint us as, credit card users in the UK have been revealed as devoted to their cards.

Finance providers have blamed their falling profits on users jumping from one low interest credit card or balance transfer credit card to the next.

This has been contradicted by Morgan Stanley Credit Card research, which has revealed that the average user stays with their provider for nearly ten years.

Credit cards receive more loyalty than employers, who can only expect their employees to stay in the average job for 7.6 years - two years before they are ready to change credit card companies.

People in the north east actually stay with the credit card deal longer than most of us stay in a marriage - 12 years compared to 11.5 years.

The findings call into question credit card companies' strategies of targeting customers with short lived low interest credit card deals and balance transfer credit card offers.

"It is clear that cardholders quite rightly expect to be valued beyond an introductory period," Patrick Muir, marketing director for the Morgan Stanley Credit Card told MyFinances.

"With our research showing that UK cardholders are staying with their credit card company for longer than their employer, it is crucial that card companies appreciate customers for the long term," he added.

Little seasonal cheer from Capital One

Mon, 5 Dec 2005 19:05:00 GMT

What has until now been the longest running balance transfer credit card is to be withdrawn from the market in another blow to credit card rate hoppers.

Capital One's Platinum balance transfer credit card previously offered 15 months of interest free credit when it was launched in September.

The credit card companies move away from low rate credit card offers and balance transfer credit card deals meant that the offer was short lived, however.

"This is a sign of the times in the current credit card market, with a recent report revealing that zero per cent balance transfer credit card deals are costing the industry over £600 million a year," low interest credit card advisor Andrew Britchford told This is Money.

"On top of this, there are reportedly a rising number of people defaulting on debts which is further adding to adverse effect on lenders profit levels."

Of the 114 zero per cent balance transfer credit card offers that were offering balance transfer credit card deals of more than five months at the beginning of the year, 23 have now withdrawn their offers.

Best rate credit card advisors predict this is due to fall further. Over the same period, the number of credit card companies charging a fee on balance transfer credit card deals has more than tripled.

"When we launched the card it had the longest balance transfer credit card deal on the market but as we are now in December it has started to lose its cache," said a capital One spokesperson.

"We are reviewing our range of products and will be bringing out some other attractive offers." The spokesperson added that the company will still be providing free balance transfer credit card deals through direct mail invitation.

Credit for Christmas

Thu, 1 Dec 2005 17:58:30 GMT

Credit card companies are looking forward to a bumper Christmas, as consumers get ready to spend on their balance transfer credit card deals and no-longer-so-low low interest credit card deals.

With the lowest low interest credit card now offering an average 15 per cent, Xmas 2005 could now work out pretty pricy for those counting on plastic.

Although many credit card companies are a lot less generous with their features nowadays, it is still possible to find some decent balance transfer credit card offers and low interest credit card deals.

The Egg Money Mastercard, for instance, provides an one per cent cash back on all purchases, which Egg has upped to two per cent until December 10th, in addition to its low interest credit card rate.

The Sainsbury's Bank Classic Visa low interest credit card is also worth checking out for its zero per cent rate for the first six months.

For users on the lookout for a balance transfer credit card, the HSBC Mastercard is offering nine months interest free.

"British shoppers are going to spend a packet this Christmas and credit card companies are rubbing their hands at the thought," said Malcolm Cole of Which?

"But with the right card, you can get an interest-free deal or even cash back. Why not get them to give you a Christmas present for a change?"

Low interest credit card prices creep up, despite falling borrowing costs

Mon, 28 Nov 2005 16:59:27 GMT

Despite the overall cost of borrowing falling, credit card companies are raising the costs of borrowing on plastic, an extensive credit card comparison has revealed.

The base rate of borrowing was cut by 0.25 per cent in August, but credit card companies have raised their rates by 0.34 per cent, the credit card comparison showed.

In October 2004 the average low interest credit card rate charged 15.16 per cent, compared to the average low interest credit card rate of 15.5 per cent in October 2005.

"For many consumers it won't make sense that credit card companies are increasing rates when the Bank of England is cutting rates," said Sean Gardner, credit card comparison expert.

"And if you owe money on your card it doesn't make sense to stay with a provider which is increasing what once were low interest credit card rates.

"That doesn't mean consumers have to accept rate rises. There are plenty of excellent credit card offers on the market. Borrowers should be careful to compare credit cards for features such as charges for transferring balances," he added.

Of the 180 credit cards on the market, only 50 offer low interest credit card rates of less than the average 15.5 per cent.

The Cooperative Clear Visa low interest credit card at 8.9 per cent, the Northern Rock Base Rate Tracker low interest credit card at 8.8 per cent, the Intelligent Finance Flat rate low interest credit card at 8.94 per cent and the Halifax Flat Visa low interest credit card at 5.9 per cent are all particularly good value.

Credit card comparison gets harder

Wed, 23 Nov 2005 17:04:41 GMT

Increasing numbers of credit card providers are abandoning the low interest credit card and balance transfer credit card deals that they have until recently used to tempt borrowers through credit card comparison.

Credit card company profits are being hit by rising levels of bad debt among borrowers, and by the charges accrued by people jumping from one balance transfer credit card deal to the next.

Capital One and MBNA have both introduced fees on their balance transfer credit card deals, and Sainsbury's Mint and Barclaycard have jacked up prices on what once were low interest credit card deals.

Nationwide also ended its zero per cent balance transfer credit card deal last month and replaced it with a rate of 4.9 per cent for nine months.

Credit card companies have none but themselves to blame for declining profits, says credit card consumer advisor Nick White, by encouraging ever more reckless borrowing on special deals.

"Now providers are paying the price in reduced profits and they want it stopped," he told This is Money. "I'm sure there is more bad news to come from other providers."

"Over the past two months, we have seen average card rates increase from 14.9 per cent to 15.04 per cent. This equates to consumers paying £80 million a year more in interest."

That said, there are still some reasonable deals on the market, such as the MBNA zero per cent balance transfer credit card and the Sainsbury's balance transfer credit card offering zero per cent for five months.

The HSBC balance transfer credit card offers zero per cent for nine months, as does the Virgin balance transfer card. For zero per cent on both purchases and balance transfers, see the Morgan Stanley and Cooperative balance transfer credit card.

Current accounts: the product we love to hate

Fri, 11 Nov 2005 18:13:02 GMT

Current accounts are the financial products most likely to leave consumers unhappy, a new poll has revealed.

Overall, 1.9 million Brits are left unhappy by their current accounts – twice as many as are dissatisfied by their credit cards, the next least popular product, with 700,000 unsatisfied customers.

"We were surprised at the level of dissatisfaction, which is pretty high according to the research," said credit card and personal finance expert Sean Gardner.

"Further evidence of this growing unrest with financial services products is evidenced by the increase in complaints received by the Financial Ombudsman Service. To the year ending March 2005 it saw an increase of 12 per cent, to more than 614,000. This followed a 19 per cent rise in 2004," he added.

The source of much of the dissatisfaction is personal loan and credit card customers picking products based purely on headline rates alone, without researching providers and other product features enough, experts suggest.

Taking any financial product is the beginning of a relationship with the provider and like any relationship a poor match is likely to leave both sides unhappy, said Mr Gardener.