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

[Deleted User]

chattychappy wrote: »

I thought the co-op issued their own cuddly blue dividend stamps. Green shield stamps were issued by nasty-ole commercial companies! I remember our local green shield stamp centre became an Argos with an almost identical catalogue.

You may be right. I might be mixiing up my nostalgia.

When I was a kid, nostalgia was a lot easier to remember. Nostalgia's not like it used to be...

skybluesaver

I've thought for a long time that the CO/OP is not as ethical as they would like us to think. I had one of their credit cards a while ago & because i wanted to pay my bill off in full each month, they reduced the interest free period from the usual 56 days to 40 days, which suggested to me they were quite happy to take my extra money incurred in interest if i couldn't pay the full amount. Also not meaning to divulge too much from the subject, it wasn't that long ago the so called ethical Co/op were being criticised for paying farmers the least amount out of all of the supermarkets for their milk. One farmer said he was losing money by what the co/op were offering him.

chattychappy

Deleted_User wrote: »

When I was a kid, nostalgia was a lot easier to remember. Nostalgia's not like it used to be...

Ha ha ha... I wrote something like that in 2009! Last post in https://forums.moneysavingexpert.com/discussion/1852875

chattychappy wrote: »

Yep. Nostalgia threads aren't what they used to be. I remember when threads came off reels.

KimYeovil

Sorry, can someone please explain what the problem is???

Credit cards are taken on with variable interest rates. You know that the charge can be altered. You are being given a whole six months to substantially eat/clear your balance. What alternative is being demanded?

chattychappy

KimYeovil wrote: »

Sorry, can someone please explain what the problem is???

Credit cards are taken on with variable interest rates. You know that the charge can be altered. You are being given a whole six months to substantially eat/clear your balance. What alternative is being demanded?

The Lending Code says consumers should be allowed a "reasonable" time to pay off the balance. The Lending Code is incorporated into the contract that people have signed up for.

If you believe 6 months is a "reasonable" time, then sure - no problem. Other providers seem to interpret this as allowing consumers to pay down the balance according to the normal repayment rules.

My opinion is that 6 months is NOT reasonable. It is arbitrary. Imagine a customer that has made a single large purchase - say an annual holiday or double glazing. In my view it would be reasonable to allow such a customer to pay down the debt in a year or maybe longer.

*jobags*

What really irritates me is that every time I go into the Brittania they try to sell me a co op current account and each time I have to explain that the co op treated DH like dirt when he was depositing £3000 plus monthly salary into their current account

There is nothing ethical about the co op and because of their links to Brittania I'm now thinking of closing my savings account there.

Jo

Paulgonnabedebtfree

My concerns about this centre around the various interpretations of the word "reasonable".
As far as I know, the Co-op are the first to come out and actually put a time limit on this (I stand to be corrected though). I believe all the other card lenders have accepted that minimum payments are sufficient.
By insisting on a six month time limit, for many customers they would effectively forcing the new, higher rates onto their customers because:
1) Many customers would be unable to repay within six months
OR
2) Any customers aware of the six month limit and realising that they would be unable to repay within that time, would not request a rate freeze in the first place.

I do feel that it is very important that this issue is addressed urgently.
If the Co-op make it stick, others would surely follow. It would be a return to the bad old days of companies shunting up rates by multiple percentage points knowing that customers would be unable to repay within whatever time limit was set.
Effectively, for anyone in a fair bit of debt in relation to their income, the ratejacking agreement might as well be tossed down the toilet.

I recall that when the changes were first agreed with the industry, someone in authority stated that they would be keeping a close eye on the credit card lenders to ensure that they didn't abuse the new system.
I strongly feel that this needs to be nipped in the bud and referred up the chain right away.
I also feel that this is not an issue that should be left to individual account holders to pursue as it always gives lenders more strength because, inevitably, many customers will cave in due to lack of awareness.

Having written all that, I do understand the possible concerns of the lenders.
This is far more complex than just comparing card lending rates with base rate.
For starters the rate that needs to be looked at is LIBOR rather than base rate. Although 3 monthly rates are currently around 0.8%, the longer the interbank lending is for, the more the rates shoot up. LIBOR has been steadily increasing of late and many are nervous that this will accelerate in the coming months and years. So the card companies, quite naturally, will wish to give themselves some degree of protection against this. One way of doing this is to charge more for their lending. Another way is to ensure that their lending is shorter term. Co-op appear to be trying to give themselves a "one or the other" get out. They could argue that if they are not allowed to do this, they will have to cut the limits of good, existing customers and have even stricter lending criteria too or maybe even push up the minimum payment required for ALL customers to counteract the extra exposure.

Also, they have to pay the running costs of their business out of this, have to give certain guarantees regarding fraud and insurance in the event of people not receiving goods and services for which they have paid by card and also, have to take a hit if a customer defaults.

In reality, I do have some sympathy for Co-op. Traditionally, they have been one of the more customer friendly companies and they have been swept up in changes that have largely been triggered by the actions of more aggressive lenders. Also, these changes did not distinguish between new debt and pre-existing debt - effectively making these changes retrospective. This could all add up to Co-op's expected income from their level of exposure being reduced.

Although I'm heavily in debt to number of card companies and an effective abolition of the anti-ratejacking deal could seriously impact me, I'm not so blinkered that I can't see their viewpoint.
However, on the basis that " we're all in this together* ", I'm afraid that they will have to feel some pain as well as me.


*A sidetrack here. I wonder if when recent history is written, Cameron's "we're all in this together" will go down in the gaffe's list with MacMillan's "you've never had it so good", Brown's (deliberately misunderstood by the media) "British jobs for British workers", Callaghan's "Crisis, what crisis?" and (allegedly but since repudiated) Marie Antoinette's "let them eat cake"

Paul_Herring

KimYeovil wrote: »

Sorry, can someone please explain what the problem is???

You see the new rate. You can either reject it and stay at the old rate and not use the card or accept and continue to use it.

Some think that credit cards are not a long term solution to debts.

So if you have a debt on a card, it's perfectly reasonable to expect that debt to be repaid, if not on a monthly basis, it should certainly be repaid within 6 months.

Others, however, use credit cards as long-term debts.

Other CC companies are more than complicit in the opinion that if the card is no longer used, but the debt remains, then the CC companies can rack up the interest over 1500[1] years and recoup costs through the (old) interest rates.

The co-op seem to want to charge the new rate after 6 months. Even if the card can't be used.

[1] slight exaggeration.

aarrgghh

Amongst all the !!!!!ing about the Co-op, and the question of why the Co-op never shows up on comparisons despite having a worthy product it that particular group, it seems to be forgotten that they have an excellent record of customer service. Something which cannot be said for Halifax for example.
I think the definition of the word ethical is being distorted by here.
This site is by definition unethical as it claims impartiality but of course can never be because all entries are based on personal/professional opinion and/or motivated by monetary principles. In other words, what's in it for them.
No business, no organisation can ever be completely ethical.

Paulgonnabedebtfree

aarrgghh wrote: »

Amongst all the !!!!!ing about the Co-op, and the question of why the Co-op never shows up on comparisons despite having a worthy product it that particular group, it seems to be forgotten that they have an excellent record of customer service. Something which cannot be said for Halifax for example.
I think the definition of the word ethical is being distorted by here.
This site is by definition unethical as it claims impartiality but of course can never be because all entries are based on personal/professional opinion and/or motivated by monetary principles. In other words, what's in it for them.
No business, no organisation can ever be completely ethical.

I believe the "ethical" stance promoted by the Co-op is more about where they invest rather than about how they treat their customers. However, it is fair to say that they are usually one of the more customer friendly companies - which makes it all the more surprising to me that they have taken this stand.
I did actually address the Co-op's normally customer friendly attitude in my last post. I feel that, to some degree, they are victims here as they are being caught in a trap largely caused by far more aggressive lenders than themselves.