Good credit report but credit card offered with the highest APR

mickael28

Hiya,

I've been with my current bank since February 2008 and that's the only credit I've got, no mortgages, loans; just that credit card. I set it up to pay it in full as well.

I've now apply for another credit card with an APR of 12.9% but I've been offered their maximum of 21.9% instead.

Not sure how this works, as this is the 1st time doing something like this, but I just checked my credit report and everything appears green for all these years, never missed a payment, etc.

Does it make sense that they don't offer me their advertised APR?

Is it worth if I go to a branch (or better call them?) to see why they gave me a different rate? I mean, will they tell me their reason or they just decide something and that's about it, take it or leave it?

Many thanks...

mattyhall22

The APR they offer will not just be based on your credit score but how much the bank will make on you. For instance if you pay the card off in full each month they will not make any money from interest. So they offer you the higher APR in the hope that should you not pay it off in full one month they can make the extra money.

You may find that if you had only been paying the minimum amount each month they would have offered you the lower APR, however you have been doing the right thing and not building the interest up.

Dont fall into the minimum payment game as you pay more out in the long run :-)

meer53

mattyhall22 wrote: »

The APR they offer will not just be based on your credit score but how much the bank will make on you. For instance if you pay the card off in full each month they will not make any money from interest. So they offer you the higher APR in the hope that should you not pay it off in full one month they can make the extra money.

You may find that if you had only been paying the minimum amount each month they would have offered you the lower APR, however you have been doing the right thing and not building the interest up.

Dont fall into the minimum payment game as you pay more out in the long run :-)

I know you're a newbie but, CC issuers don't make decisions based on how much money they make on customers. They don't have crystal balls that allow them to see that a customer will always pay off their balance in full !

The OP should call the CC issuer to see if they can clarify why he was offered a different rate. It can depend on lots of things. Without a full picture of the OP's financial situation, no-one can tell them why they didn't get the advertised rate.

Ben8282

If you have had a card for 4 years which you always pay in full why do you care about the APR?

jon1965

You may well say that but after years of listening to Martin on Radio2 I have to disagree. Ok so they don't have a crystal ball but they look at history. They want to make money, they like customers who don't pay off the full balance.

meer53 wrote: »

I know you're a newbie but, CC issuers don't make decisions based on how much money they make on customers. They don't have crystal balls that allow them to see that a customer will always pay off their balance in full !

The OP should call the CC issuer to see if they can clarify why he was offered a different rate. It can depend on lots of things. Without a full picture of the OP's financial situation, no-one can tell them why they didn't get the advertised rate.

meer53

jon1965 wrote: »

You may well say that but after years of listening to Martin on Radio2 I have to disagree. Ok so they don't have a crystal ball but they look at history. They want to make money, they like customers who don't pay off the full balance.

I assess customers for credit cards. Whether we will make money or not is NEVER taken into account in my decision. It's based on affordability and their existing levels of debt against their income.

mickael28

Thanks guys, I'll take that into account and will try to clarify tomorrow. If they just take into account my debt, then it doesn't make sense, as I don't have any... I'm more with jon1965's idea, but let's see if they're able to let me know tomorrow (I doubt they say... we give you a higher APR because we want to make more money on you!)

@Ben8282, that's what I thought at the beginning. Until I read more about those credit cards (that don't charge when you use them in ATMs abroad) and they explain that you always need to pay interests from the day you get the money out, even when repaid in full. So better to have it lower...

opinions4u

A typical distribution of credit card applications will be along the lines of:

50% declined
26% at 12.9% rate
12% at 17.9% rate
12% at 21.9% rate

So your in the top 39%-50% of all applications (based on my invented figures above - but they won't be a million miles off).

I've been with my current bank since February 2008 and that's the only credit I've got, no mortgages, loans; just that credit card. I set it up to pay it in full as well.

Do you own your own home? Are you on the voters roll? How long have you lived there for? How long have you been with your employer? All big factors in a lender's credit scoring decision making.

Not sure how this works, as this is the 1st time doing something like this, but I just checked my credit report and everything appears green for all these years, never missed a payment, etc.

And they have offered you a further credit facility as a result.

Does it make sense that they don't offer me their advertised APR?

Yes. You are a good applicant, but they get better applicants.

Is it worth if I go to a branch (or better call them?) to see why they gave me a different rate? I mean, will they tell me their reason or
they just decide something and that's about it, take it or leave it?

They won't know. "Computer said xx%" is the answer. So take it or leave it.

HoneyAndLemon

mickael28 wrote: »

Hiya,

I've been with my current bank since February 2008 and that's the only credit I've got, no mortgages, loans; just that credit card. I set it up to pay it in full as well.

I've now apply for another credit card with an APR of 12.9% but I've been offered their maximum of 21.9% instead.

Not sure how this works, as this is the 1st time doing something like this, but I just checked my credit report and everything appears green for all these years, never missed a payment, etc.

Does it make sense that they don't offer me their advertised APR?

Is it worth if I go to a branch (or better call them?) to see why they gave me a different rate? I mean, will they tell me their reason or they just decide something and that's about it, take it or leave it?

Many thanks...

12.9% is the representative rate. They only have to offer it to 51% of successful applications. They will not tell you why you have been offered the highest rate, the system makes the decision based on your application and will not give a reason. It takes everything into account, (income, debt, how long you live at your address, how long you have been in current employment, length of time with the bank, current credit committments, on the electoral roll or not, payment history, lack of credit history, too much available credit already etc). So even if you do call them or go into branch, you won't find out the reason. They don't have to offer you the best rate. So yeah, take it or leave it.

Out of interest, did you say you already have a Halifax credit card? I take it you must have applied online then? Halifax have a 1 credit card per customer policy now, although sometimes the online system doesn't quite pick up that you have an existing credit card already, otherwise it would a straight decline. You wouldn't have been able to apply online/in branch. However this may be why it resulted in highest APR too as the online system is not very customer friendly.

Andystriker

HoneyAndLemon wrote: »

Halifax have a 1 credit card per customer policy now

I have 2 Clarity Reward Credit Cards and make £10 per month out of them.

HoneyAndLemon

Andystriker wrote: »

I have 2 Clarity Reward Credit Cards and make £10 per month out of them.

Good for you.

But since they integrated with Lloyds in September, the rule is now 1 credit card per brand (1 with Halifax, 1 with BOS, 1 with Lloyds tsb).