Lenders set to share more information about your credit card usage?

VenuS

Got this email this morning from checkmyfile, and thought I would share with the board. Not sure if it's true, or if it is, wow. Do we act?, or is this just scare mongery?

Sorry mods if this is in the wrong place, or it's been posted before ( I checked but couldn't see anything ) don't shout please:)

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Get new cards now – before your choice becomes limited

Barclaycard, Egg, Cooperative Bank and Abbey announced earlier this month that they are to share greater detail on credit card usage, including how much you spend and how much you repay each month.

Each of the four has announced increases in bad debts over the past year. They, together with all credit card companies, are also trying to deal with the increased financial awareness of customers who know that they can easily move to take advantage of cheaper deals from their competitors. In short, consumers are gaining the bargaining edge for the very first time and that is hitting profits.

Traditionally the way credit card companies have dealt with this problem has been to recruit new customers to replace those lost. But there is no sense in taking on customers if they are likely to be ‘full payers’ as opposed to the much more profitable ‘extended credit takers’. ‘Full payers’ are often unprofitable. They know exactly how to work the interest free period system.

This new level of detail on credit reports will enable credit card companies to distinguish between profitable customers and unprofitable ones.

If you regularly pay off your balances in full every month, you may well find it much harder to get a credit card in the future. So if our analysis is correct, you would be well advised to apply for new cards now, whilst you still have a wide choice of providers. That way, you’ll be able to access the lowest interest rates that your credit rating should command, which may well not be available to you in the future.

Debras_Angel

Thanks for that Venus.

You can't win when you're not in credit and you can't win when you're in credit!!

Penalised because you pay on time...which we always do, what next I wonder.

Debs

Joe_Bloggs

If you regularly pay off your balances in full every month, you may well find it much harder to get a credit card in the future. So if our analysis is correct, you would be well advised to apply for new cards now, whilst you still have a wide choice of providers. That way, you’ll be able to access the lowest interest rates that your credit rating should command, which may well not be available to you in the future.

It doesn't matter what the interest rate is if you pay off the balance every month before the due date. The egg money card pays interest of 4% gross on positive balances. This feature encourages early full repayment and the 1% purchase rebate makes it a winner. Egg can share that with the Co-op, Abbey Natitional and Barclays.
J_B.

Slick50

Joe_Bloggs wrote:

It doesn't matter what the interest rate is if you pay off the balance every month before the due date. The egg money card pays interest of 4% gross on positive balances. This feature encourages early full repayment and the 1% purchase rebate makes it a winner. Egg can share that with the Co-op, Abbey Natitional and Barclays.
J_B.

Indeed. In fact, when I applied for my Egg Money Card a few weeks ago they didn't even give me an interest rate. Instead they said I MUST pay off the entire balance each month - not a problem, as I was going to do that anyway!

Steve

VenuS

If Im right, egg money card is different to the egg credit card?

angelica

This is strange Slick50, Egg Money gave me my interest rate straight away, I had a choice to pay deposit each month to keep balance positive, to pay minumum amount or full amount if balance negative. Are you sure you have not missed something?

Btw you can see your interest rate when you open recent transactions screen of Egg Money, also below transactions is your current payment arrangements which you can change anytime.

Joe_Bloggs

@ VenuS
To some extent Egg have an identity problem regarding their cards.

1) They are both now Green but the original Egg Green was always Green whilst the Egg Blue became the Egg money and transformed into a Green colour. The Egg Green used to have 0.5% purchase rebate but that dwindled away to 0.1% and then to nothing.
2) Egg terms and conditions vary wildly from when you opened the account for a specific card. They are a complete mess in my view.
J_B. (Egg are still the best, I don't get the chance to say dwindled very often !)

VenuS

I have an egg card but I really don't get egg money lol. :snow_laug

wacko911

Correct me if im wrong but isnt there laws in place to prevent companines sharing information in this way? I thought one of the purposes of the data protection act to limit the way in which companies 'share' YOUR information. Like the original poster said whats next, your current and savings accounts on show for the whole world to see in the intrests of avoinding 'bad debit?', for big compainies.

Surely how much you have borrowed and if your payments are on time should be more than enough to base a decision on wether or not to lend. Anything more should be contested by everyone, even if it means speaking with your feet, and going elsewhere.

barclaycard_barbs

A bit of a vested interest here (the name's a give-away) but a few points:

- the DPA does make allowance for banks sharing information about people's use of credit
- this move is not just about the decision to lend (though the info will help with that) it's about helping to spot when things go wrong with existing customers. An up-to-date payment record can mask all sorts of problems if you don't know how much is being re-paid or, for example, if the customer is taking cash from one line of credit to service debts elsewhere
- i can understand people's concerns about privacy but banks are under enormous pressure to lend more responsibly. Most people (government, consumer groups etc) are agreed that better sharing of data is an important part of this
- For every money-saver out there who knows the system inside-out, there are more vulnerable customers who either through lack of understanding or pressure of circumstance are looking to borrow money they cannot afford. Better data sharing is about helping the latter group - not penalising the former.
- Yes, banks want to avoid "bad debt", it's in our interests. We also want to help customers avoid the misery of getting in over their heads. Data sharing isn't the only thing that needs to be done but it is a useful step

Um, that's it. I know MSE is all about "them and us" but I do wonder what position banks have got themselves in when an initiative aimed at helping more vulnerable customers (and god knows we've seen some horrendous stories in the past year of what happens when things go wrong) is interpreted as an underhand effort to stop people playing the 0% game...

Joe_Bloggs

@barclaycard_barbs I agree with very much of what you say so very eloquently. Where do the banks or alleged financial institutions stand on declaring the assets of their clients to each other ? What use is the debit side wthout the credit side ? This is not meant as any criticism of anyone or any financial institution. The views of all are welcome.
J_B. (A Merry Christmas to ALL)