Credit Card News

Card payment surcharges to be slashed

Fri, 30 Dec 2011 20:24:00 GMT

The government has announced it will ban excessive fees for card payments by the end of the year. The precise details will be decided after a consultation, but only a small fee will be allowed and this must accurately reflect the actual costs the retailer incurs.

While fees are widespread, they have been particularly controversial in the budget airline industry where some companies charge as much as £8 to pay by card, seen as a way to disguise costs that aren't included in advertised bargain prices. Consumer group Which calculates the daily cost of card fees to airline passengers as £265,000.

The move actually goes a step beyond recommendations from the Office of Fair Trading, which had simply called for retailers to give clearer notice of the fees, for example in advertising.

The new rules will come in advance of European legislation expected to take effect in 2014 which will mean retailers can only pass on their actual costs when applying a card payment fee.

Ryanair has already challenged the proposed rule change, claiming its charge is an administration fee rather than a card-related

Consumers paying off credit cards

Sat, 29 Oct 2011 22:35:00 GMT

Net credit card borrowing is continuing to fall, prompting speculation that customers are indeed tightening their belts.

According to the British Bankers' Association, both spending and repayments dropped by around £100 million in September compared with August. That left the same gap between the two, with £7.1 million repaid and £6.8 million borrowed.

The speculation is that even though many people are in financial problems, the overall response has been to cut down on the type of "luxury" spending that is commonly fuelled by credit cards, while those with cash to spare are more likely to pay off cards than keep on buying.

Despite the disparity, once you figure in interest charges the total amount owed by the British public on cards still rose by about £200 million, making a total debt of £35.9 billion. At the same time, the aggregate balance of current accounts rose by £2.5 billion across the month, suggesting consumers are cutting back both cash and credit spending.

The result could be banks offering slightly better credit card deals such as reduced rates in order to entice customers to get spending

Time to pay off your credit card bills?

Fri, 7 Oct 2011 18:31:00 GMT

Credit card debt is back in the headlines after David Cameron rewrote his Conservative party speech to avoid confusion.

An original draft of the speech, released in advance to the media, appeared to imply that the only way out of the national debt crisis would be for the public to pay off its credit card and store cards. Before giving the speech, Cameron tweaked the comments to say that households are paying off bills.

Economic critics said that if consumers were to all divert their cash to paying off bills rather than spending, the resulting drop in demand would cause a recession. Others took issue with the revised speech, arguing that if anything, consumers are getting further into debt.

However, other financial commentators have noted that, spending aside, paying off credit card balances is usually the most effective use of money as such bills carry high interest rates. In particular it usually makes little sense to have money left in savings until credit card debts are

Debit card hidden costs under attack

Fri, 9 Sep 2011 18:47:00 GMT

Consumer group Which? is increasing its call for a legal ban on surcharges when customers pay with a debit card. It says the change could been made through a minor amendment to existing laws.

The group has previously raised the issue with the Office of Fair Trading, which has demanded travel companies be open and clear about such charges before the customer pays the final bill.

Now Which is calling on the government to amend the existing Payment Services Regulations to outlaw the charges all together. That mirrors advice given by the government and the OFT after its review of the issue this year. However, the OFT does not have the power to control the prices set by business, merely the way those prices are explained to customers.

Even if the government doesn't respond to the calls, there could be legal changes on the way. Proposed European regulations could eventually mean travel companies are forced to make sure surcharges adequately reflect the actual added costs they face in processing card

Halifax rewrites rules on credit card rates

Fri, 15 Apr 2011 18:29:00 GMT

Halifax and Bank of Scotland have introduced a major overhaul of the way its credit card works. Each customer will now have a variable interest rate, based both on their own banking activity and Bank of England base rates.

The individual rate, which will apply to all forms of spending (whether cash advance or purchases) will take effect in April. The starting point will be the average rate the customer actually paid in the first three months of this year, plus the base rate, which is currently 0.5%.

Whether individuals win or lose at first will depend on their activity so far this year. Generally those who've only made purchases will be better off or notice no change, while those who've made a lot of cash advance withdrawals may see rates rise.

Rates will then vary in future in line with base rates. There will also be a penalty increase for actions such as breaching credit limits or missing minimum payments. Controversially, the rates also take into account similar actions with any other accounts the customer has with the Lloyds Banking Group, including bank accounts.

According to Halifax, the changes are designed to make charges more transparent, with customers knowing

Missed bill payments could be serious issue

Fri, 11 Feb 2011 20:15:00 GMT

An estimated eight million Brits missed a regular bill payment last year, according to a new survey. That's prompted warnings that such activity could affect credit ratings.

According to a moneysupermarket survey, one in six people were late with a bill payment during 2010. The most common missed payment was of a credit card bill, with an estimated four million people doing this, a proportion that tops one in ten Londoners.

Missed credit card bill in this context does not mean failing to clear the balance, but rather missing the mandatory payment. This has a direct effect on credit ratings, but also entails late payment fees. In some cases it can also mean an immediate end to fixed-term offers such as a 0% balance transfer deal.

According to the site's Kevin Mountford, whether bills affect your credit rating varies. While some household bills aren't take into account, others are, notably contract mobile phone deals and home broadband packages. He warned that every missed payment is missed, and this could magnify to spell the difference between getting an affordable rate or not when later applying for a

MBNA rapped for debt policies

Fri, 17 Dec 2010 19:40:00 GMT

A major credit card group has been criticised by regulators for the way it deals with customers in debt problems.

The Office of Fair Trading said MBNA not only failed to meet the standards the industry expected, but also failed to follow its own policies.

The criticism covered two main points. Firstly, the group did not provide clear enough information to cardholders who had fallen behind with payments but were able to offer smaller amounts. As a result, MBNA has now agreed to make it clearer when it will accept repayment offers that a customer has made, based on what they can afford.

Secondly, the group had not always stuck to its own policy of dealing with debt management firms and other representatives where they had been appointed, and had instead continued writing to the customer. It will now only make such direct contact in limited circumstances such as an agreed payment not being made, or the representatives being uncontactable.

As part of an agreement with the OFT to make the changes, MBNA could face formal action including fines if it doesn't live up to the

Online card card spending pushes �200 a month

Fri, 3 Dec 2010 19:11:00 GMT

More than 25 million people regularly use their credit cards for online purchasing, with an average monthly spend of £192.

According to Sainsbury's Finance, which carried out the research, most spending is for relatively low-cost items such as music, DVDs and books. These are all products that are identical wherever you buy them, meaning online savings become all the more powerful.

The company noted that an estimated 5.9 million people only began shopping online with cards in the past three years. It believes just 7% of credit card holders never use the cards online.

Perhaps surprisingly, young adults -- who are commonly seen as the most net-savvy -- spend the lowest amount online each month: 18 to 24 year olds spend an average of £162.60, while 35 to 44 year olds are the biggest spenders with £214. Of course, younger adults tend to have lower incomes.

The figures don't distinguish between spending for convenience, with the payment made as soon as the credit card bill comes, and spending as a form of medium or long-term credit.

In separate research, the company also found that the average consumer puts 21.2 percent of their outgoings on credit cards. The two sets of figures suggest an

Google joins phones-as-cards battle

Fri, 19 Nov 2010 19:12:00 GMT

Google has revealed that its next generation on mobile phones will join the growing number of schemes aiming to let users make payments without needing their credit cards.

The next edition of the company's Android mobile operating system, codenamed Gingerbread, will include support for Near Field Communication chips, which can transfer information wirelessly over a small difference. The company talked of users tapping their phones at a paypoint, but it's not clear yet if the tap action trigger the payment, or if (as with some existing systems in the US) it is simply a way of making sure the phone is placed close enough to a reading device.

Google stressed that it won't be involved in the payment systems themselves or have any access to data. Instead retailers and card companies will arrange to use the technology, with payments processed by a third party.

It will be up to individual phone manufacturers whether to include the chips, but it appears likely it will appear in the Nexus S, an Android phone produced by Samsung that looks set to be marketed directly by

Swipe and go with new-style credit cards

Fri, 5 Nov 2010 19:02:00 GMT

MBNA and Virgin are to introduce contactless credit cards in the UK. The technology, which is already used by Barclays, means customers can pay without having to wait for a shop assistant.

The system involves a small radio chip being built in to the card. It can then be used at participating shops by simply being waved in the air close to a scanner.

There are security measures to reduce the likelihood and effects of fraud. For example, with the MBNA/Virgin system customers will need to make a traditional chip-and-pin transaction when they get a new card: this will then activate the contactless technology. The occasional transaction will ask for a PIN as an added security measure. And payments on contactless cards will be limited to £15 or less.

MBNA will include the technology on all new and replacement cards in the future, which should mean the company will have five million in circulation by the end of next year.

The technology is particularly popular with chains of coffee shops and sandwich stores where most transactions are low value and the number of customers varies greatly at different times during the

Millions caught by minimum payment trap

Thu, 21 Oct 2010 10:49:00 GMT

Three million credit card holders in the UK admit to only paying the minimum payment each month -- a practice that can easily rack up interest costs in excess of the original borrowing.

Almost 9% of people questioned by Moneysupermarket said they only paid the minimum, which usually barely covers interest costs and merely chips away at the balance. Because the minimum payment is based on a percentage, the amount paid off drops every month.

The company gave the example of somebody borrowing £1,000 at the current market average rate (18.13% a year): by only making the minimum payment they would take 17 years to repay the balance, and would have paid £1,114 in interest.

The survey also found that 41% of people with cards have had an outstanding balance for more than a year, while 14% have had the debts for more than five years. A spokesman for the company advised customers that credit cards represented poor value for anyone unable to pay off the balance within a year and that people in that position should consider either finding a 0% balance transfer deal or taking out a longer-term personal

Consumers Association warning over airline credit cards

Thu, 14 Oct 2010 15:24:00 GMT

The Consumers Association has warned people to take care before taking out credit cards linked to an airline. It says the apparent rewards often come with high hidden costs.

Writing in Which? Holiday, the organization said one major drawback was that the "free flights" that users could earn by spending on the card often didn't include taxes and other charges. In some cases this could cost more than the flight itself, meaning the cardholder wound up paying more than half the total price of the "free" flight. At least two providers then insisted these fees were paid using the card itself, which entailed an additional charge for using a credit card.

The group also noted that consumers needed to check carefully to see how much they would have to spend to earn a flight. Depending on the card and the destination, the amount that had to be spent to get one free mile of travel ranged between £3.69 and £5.51.

Another ironic problem given the nature of the cards was that none of them examined by the magazine offered competitive rates for spending

Supermarkets hit by credit card glitch

Tue, 12 Oct 2010 10:28:00 GMT

Several major retailers were unable to accept card payments for a brief spell last weekend because of a computer problem.

The issue affected all 872 Sainsburys stores, plus Waitrose and B&Q among other retailers. The outage lasted between 20 and 45 minutes depending on the location.

The problem was down to a Barclaycard processing system, which had a "technical issue" for 18 minutes that left some cards declined. This then resulted in all payments at certain retailers being blocked for around an hour. The company says the issue appears to have been fixed successfully, but it continues to monitor operations to see whether it reoccurs.

Many stores experienced customer disgruntlement, with shoppers either building up queues at cashpoints or simply leaving their shopping at the checkout and returning home.

Waitrose noted that it was able to carry out 95% of attempted transactions thanks to a back-up system operated within the supermarket chain itself.

The Barclays problems follow a technical issue in late August that left some account holders unable to use cashpoints, online and phone banking and electronic payment

Cashflow struggles create credit card demand

Mon, 27 Sep 2010 19:01:00 GMT

Almost half of people struggle to make it from payday to payday each month according to a new survey. Credit card repayments were noted as the biggest problem in keeping afloat.

The survey from insolvency firm R3 showed 11% of people were regularly running out of available cash before getting paid, while 31% occasionally experience the problem. On average those who struggled began doing so on the 20th day after the previous month's payday.

While a quarter of people admitted that "unnecessary" spending such as going out was to blame, more than a third pointed the finger at credit card monthly payments coming due. Around one in six said other repayments such as bank loans and mortgages were the problem.

According to R3's Steven Law "Our addiction to credit cards is still out of control" with the result being that personal insolvencies have risen by 350% in the past 10

Debt writeoffs could mean better credit card deals

Sun, 19 Sep 2010 10:58:00 GMT

The amount of debt written off by credit companies has reached an all-time high. Yet ironically this could mean some borrowers get better offers from lenders.

According to the Bank of England, the card companies wrote off around £40 million a day between April and June, a record total of more than £2 billion.

However, the intricacies of credit ratings mean this could be good news for some borrowers. Financial firms are themselves rated for creditworthiness, which affects the levels of investment they can get. One factor in this credit rating is the proportion of their lending to customers that is judged particularly risky. One way to keep this proportion low is to increase the amount of lending to customers judged a safer bet.

This will have mixed effects for the public. Those without credit cards will find it harder to get a card as companies won't want to take on people without a solid credit history. However, existing customers with a good record will be encouraged to take out further borrowing, which could mean more favorable offers. The key for customers is to use this to their advantage for credit they need, rather than to simply get further into debt simply

Sainsbury's to launch new fee credit card

Fri, 17 Sep 2010 18:27:00 GMT

Sainsbury's is to launch one of the most high-profile credit cards to carry a monthly fee. Unlike other fee-based cards, it is aimed at the general consumer market rather than those on high incomes.

The "Gold" card will carry a £5 a month fee, which compares to £250 or more for most other fee-based cards. Benefits of the Sainsbury's card include global travel insurance for the cardholder and their family, no transaction fees for overseas spending, no cash advance fees, and double reward points when used to pay alongside the store's Nectar card. The card also carries a 9.94% rate on purchases, which is comparatively low.

Other attempts to bring fee paying card, beyond those aimed at high earners, have generally charged a low annual fee, with the main benefit being a cashback. Those cards have been a good option for people whose annual card spending is high enough: for example, a Capital One card charging £18 a year and offering 1% cashback was profitable for those spending more than

Credit card interest free periods extended

Sun, 5 Sep 2010 18:21:00 GMT

Customers taking out new credit cards can get interest-free offers for increasingly longer periods, new figures show. But there's debate about the motivations of the card providers concerned.

The figures come from MoneySupermarket, which says that new customers are offered a 0% rate on new purchases for an average of 12.2 months now, compared with 10.8 months at the same point in 2007. The average duration of a 0% period for balance transfers is now 15.4 months compared with 12.8 months three years ago. That timing is particularly significant as 2007 was the point when lending was at its peak.

One possible explanation for the change is that the card market is becoming more competitive and firms are forced to offer more enticing deals to get customers to switch card providers.

However, there are also accusations that the change is more calculated and is an attempt to cash in on customers who take advantage of the interest-free periods but find themselves unable to repay the balance transfer or purchases before the deal runs out, leaving them paying rates which, while not at their highest levels ever, are at an all-time high in comparison to Bank of England base

MBNA offers super-cheap super-balance transfers

Sun, 5 Sep 2010 17:36:00 GMT

A credit card company is offering consumers a low-cost way to pay off their overdrafts. But credit experts are warning that people who aren't extremely careful could wind up losing out through the deal.

The MBNA deal offers new cardholders the option to borrow money on the card and have it transferred directly to their bank account, thus paying off their overdraft in part or full, a facility sometimes known as a super-balance transfer. As long as the transfer is carried out within 90 days of taking the card out, there is no handling fee and the money will only attract a rate of interest of 1.9% for the first 12 months.

Used carefully this could save a great deal of money compared with the interest the cardholder would have otherwise been paying on their overdraft, or would have paid on a loan taken out to clear the overdraft.

However, the danger is that this will be seen as a quick solution with the cardholder not tackling the underlying debt problem. There'll be a temptation to simply use up the overdraft again and not pay off the card, meaning that at the end of the year the person will still have

Watch out for credit card fraud, small firms told

Thu, 19 Aug 2010 14:19:00 GMT

Small businesses are at an increasing risk of credit card fraud according to a lobbying group.

The Forum of Private Businesses says it has seen a notable increase in the past month of the number of calls it receives from members who've suffered payment processing fraud.

It says the biggest danger is online card payments, known as card-not-present transactions. If such purchases turn out to be fraudulent, the company may find that not only do they have to refund the money to the legitimate cardholder (while having sent the goods to the fraudster), but also have to cover the card issuer's costs in arranging the refund. As well as the financial loss, this can cause cashflow and accounting problems as the retailer may have already chalked up the money in its income figures before it is reclaimed.

The FPB recommends that retailer look for online card payment processing services that, where possible, require the buyer to type in an additional security password set-up by their card provider. This is not usually known to somebody who has physically stolen a card or got hold of the card

Phone giants hope to ring in the changes in UK credit card market

Fri, 6 Aug 2010 18:54:00 GMT

Two major US mobile phone companies think they could strike a lethal blow to the credit card industry. AT&T and Verizon are working on a scheme to not only offer payment via mobile phone in place of cards, but to cut out the credit card companies altogether.

The scheme involves handsets having a special microchip which would mean user could make a payment by simply waving the phone across a special payment device, limiting the need for shop staff attention and cutting payment times.

Security would come via the phone's keypad itself and might involve a password rather than a PIN, thus improving security. The system would also mean a stolen phone could be immediately and remotely blocked from making payments.

But while the technology is intriguing, what's really grabbing attention is that the two networks want to run their own bank and credit accounts to use the system. The plan is for Discover to carry out the card processing, with Barclays running the accounts themselves.

Whether the scheme will succeed is far from certain. As well as adding costs to both customers and retailers, it's hard to see how the firms will overcome the problem that without customers, retailers won't be

Credit card rates at eight-year high

Fri, 30 Jul 2010 20:43:00 GMT

Credit card interest rates in the UK have reached their highest levels since February 2002, the Bank of England reports. The average rate charged in June was 16.69%.

The news has caused widespread complaints given that the bank base rate -- the rate the banks pay to borrow the money they then lend on credit cards -- remains at the same record low of 0.5% that it has been at for more than a year.

While interest rates on cards no longer appear to bear any relation to base rates, the rates paid to savers remain low at an average of just 2.7%. This may be the biggest ever disparity between savings and loans rates.

Card issuers say there are a variety of factors which are pushing rates up. One is greater fear that borrowers will be unable to repay: credit card borrowing is unsecured, which means lenders can't repossess property over unpaid debts. The companies have also blamed increased regulation of card providers for the rise in rates.

In most cases the higher rates are offered only to new customers. Where a bank wants to increase the rate for an existing customer, it is

New Halifax credit card could cut travel costs

Fri, 9 Jul 2010 19:01:00 GMT

Halifax has launched a credit card aimed specifically at holidaymakers. It says it's targeting customers who fear excessive fees using cards abroad.

The Clarity card has no cash advance fees when used at cash machines, either in the UK or overseas. There is also no foreign exchange fee for overseas spending. Most credit cards carry such a fee which is effectively hidden: it's applied to the exchange rate for the transaction, meaning the cardholder pays slightly more in sterling than they would with a straight exchange.

Domestic benefits of the card include a variety of cashback offers, no fee on balance transfers, and the fact than balance transfers are charged at the same APR as purchases. This means new customers who transfer a balance won't have to worry about falling into the trap of new purchases racking up interest until the balance transfer is paid off in its entirety.

While the card has been welcomed by analysts who hope it will spark further competition for overseas spending, its been noted the card isn't necessarily the best option for people with outstanding balances on their existing cards. They may find a better deal through smart use of free or cheap balance transfer

Lessons to learn from credit card scam

Mon, 5 Jul 2010 19:33:00 GMT

Four men have been jailed for between 3.5 and 4.5 years each after being convicted of scamming the public out of £725,000 using bogus credit and debit card readers.

The group installed small devices in chip-and-pin card readers in five petrol stations across England. This was done without the knowledge of the station owners, though in some cases sales staff assisted in the scam.

The ringleader was discovered with 35,000 sets of card details on his laptop. That would be an average theft of £20 per card, though it's not clear how many cards were actually exploited.

Scammers are said to target petrol stations as customers are usually in a hurry and less alert and security conscious. That said, it doesn't appear as if there was any visible way of spotting that the machines had been tampered with.

How banks deal with such cases is down to their company policies, though many will refund money taken through fraud as long as the customer has acted responsibly. Victims of such crimes are advised to check their records at a credit records agency to make sure the scammers have not made applications for credit using their