MSE News: Co-op 'breaking spirit' of anti rate-jacking credit card rules

Rules agreed between the Department for Business, Innovation and Skills, and the credit card industry last year, state consumers must then be given a "reasonable" time to clear existing debts. UK Payments, a trade body for card firms, says that loose definition means card providers can set payments at different levels.


Co-op's six-month rule does not fall in line with industry standards.

''Reasonable'' for the purpose of repaying a debt should look to the individual's circumstances - i.e. this varies from person to person AND the amount of debt at the point of changeover. Basically "reasonable" is a "how-long-is-a-piece-of-string" con by the credit card buddies on the dim-witted government.

"Where you use your account or do not repay any outstanding balance within six months you will be taken to have accepted the change in rate and the new rate will apply to you."

This is tricky too I would suggest - a way to lull people into falling under the change when the purpose of the industry agreement was to try and prevent [the unwary] doing precisely that and getting into greater difficulty.

Co-op should be ashamed. And if that doesn't work they should be boycotted [IMO]

typical - this being the same co-op that will bounce a direct debit even if you deposit the cash for it the same day.

apparantly cash deposits at there branches are not same day.....

Milarky wrote: »

''Reasonable'' for the purpose of repaying a debt should look to the individual's circumstances - i.e. this varies from person to person AND the amount of debt at the point of changeover. Basically "reasonable" is a "how-long-is-a-piece-of-string" con by the credit card buddies on the dim-witted government.[IMO]

I don't think it is unfair of the Co Op to define what is a "reasonable" time period for repaying credit card debt, which arguably should not normally be long term debt, although I personally would agree that an industry standard formula for defining reasonable (based on something like debt as a percentage of income) wouldn't have gone amiss when the rules were drawn up.

Allowing customers to pay off at the rate of the minimum repayment every month for years is hardly "reasonable" to the bank (taking a look at a couple of the credit card summary boxes on the Co Op website, customers could theoretically reject the new interest rate and still be repaying the balance 17 YEARS later!). If they are in financial hardship other arrangements should be being looked into rather than this option.

Six months is clearly too short a time frame though as a baseline, and the reality is that those customers in financial hardship (i.e. the ones that really suffer from ratejacking) are probably the least likely to formally request more time to pay. The Co Op should have a rethink on this one rather than wait for the Ombudsman and regulator to get involved.

premierfella wrote: »

Allowing customers to pay off at the rate of the minimum repayment every month for years is hardly "reasonable" to the bank...

Why wouldn't it be? They didn't consider it unreasonable to offer a credit limit at an APR with a minimum payment option. At the minimum levels they are raking in massive amount of extra interest charges (but for a very long term), which would bring in a massive amount of profit when their interest to borrow is lower (which it must be).

At best, it's the least reasonable for the customer, but they are the ones to be protected - the payments will be even less reasonable for them with an increased APR.

Just for a quick example of the timelines - from the minimum payment calculator on the site, paying the minimum of 2% (min £5) of £2,000 @20% APR:

You'd pay off £2,000 in
44 years and 10 months
and cost £5,940 in interest

Cooperative seem to be redefining the word 'Ethical', and not in a good way. Just one of many technical system 'manipulations' they have been up to.

Co-operative / Smile are phasing out Visa Electron Cards, new cards are being issued only as Visa Debit cards.

Existing Valid Visa Electron Cards (with an Electron Logo) have been quietly reclassified by online systems to be now recognised as Visa Debit Cards instead. This happens when using an existing Visa Electron card and choosing 'Electron' as the card payment type when paying for the transaction.

The transaction will state the card has not being recognised as a Visa Electron Card (even though it is) allowing you to continue the transaction, but then charge your Visa Electron card the fee associated with Visa Debit Cards.

Using a Cooperative/Smile Visa Electron Card, this was tested against the flybe.com website - which, even though it showed flight details with card payment fees of 0.00 when Visa Electron was selected, submitting the card details came back with the card not being recognised as a Visa Electron and a subsequent fee of £18.00 was adding to the booking of the two flights. £4.50 fee per person/per flight each way.

Phoning Cooperative, they denied changes has been made to the bin codes issued by the bank, and stated existing Electron cards starting 4508, should still be recognised as 'Visa Electron' and the fees associated with this, but stated that it had 'merged' all cards issued to Visa Debit. Co-operative has also issued no changes to terms and conditions confirming this change as regard to existing Electron cards being treated as Visa Debit type transaction.

Flybe stated that 'Visa Debit' bin information is currently associated with Payment Cards relating to Cooperative/Smile, so that all Smile cards are now recognised only as Visa Debit. But stated there was nothing currently they could do.

The current flybe.com website is therefore misleading as regard to the prices advertised, as it appears there is no way of obtaining flights at the minimum advertised price, by paying Visa Electron, as according to Cooperative, even if you have a valid unexpired Visa Electron Card - it isn't an Electron Card anymore.

To the consumer, who has a Visa Electron card in their hand, and have selected payment type as 'Electron' in order to avoid fees, it looks as if the Cooperative has phased out Visa Electron long before the existing expiry date of the cards, by this subtle back end system change.

If you are charged this fee on an Electron Card, I suggest you query it with Cooperative Bank.