'Inertia' Interest Rate Rises - New Card Scam?

GettingThingsDone

johnllew - duh! that's the point; they are now targeting people who will have difficultly moving to another card.

I think its called extortion, and it's probably just the start of things.

I have spoken to a number of people who can all confirm that this practice is definitely going on.

The big question is - what can we do about it???

MacBoy

GTD - thanks for your comments. I think the thing to do at this stage is to gather data and evidence. If we are in a position to do this and get a decent response; the next thing IMO would be to take that evidence and make a joint representation to the OFT, and the FOS (possibly even the ICO too -I'm not a lawyer, but it it may be arguable that it is an abuse of their privileges as Data Controllers?).

Anyone more learned than myself care to comment?

wyebird

Yes, I think that you are right. All CCs have put up their rates, but the variation is huge. My Smile day to day CC has just gone up 2% to 11.9%, which I suspect is more of a true reflection of rising base rate and a bank trying to maintain its profit margin.
Some of my Oh's stuff has gone up from around 15% to 25%! Luckily we could pay off and or move it eleswhere. As soon as you do that then the 0% and LOB offers flood in.
This is great, if you have a bargaining tool, but if you can't move then you are stuck with a rate that is ridiculous, and as ever it hurts those in the most vulnerable position. Vanquis etc were villified for their 30% + rates when they started, but now the mainstream is catching up!

Silversurfer_3

I feel that Barclaycard is playing unfair to customers of long standing.
Interest rate went from 17.9 to 24.9 OK cope with that then pay of average 10% per month then every three months or so reduce the credit limit to just above the balance, and stop facility for drawing cash. WHY?? they say as a a "responsible lender" and "in view of current situation" I think it is because once in every 6 months I draw cash and I do not purchase with it therefore they do not collect the normal fees from retailers for providing this service so can only earn from interest rate they charge me. Never paid late fees or over the limit fees. As far as I am concerned I can live without the credit limit being higher than my balance as I make sure the 10% of balance paid I would not need to draw out. My aim is to completely pay them off and close the account and hope others will do the same. As far as I am concerned BARCLAYCARD SUCKS!!!!!I feel that Barclaycard is playing unfait to customers of long standing.
Interest rate went from 17.9 to 24.9 OK cope with that then pay of average 10% per month then every three months or so reduce the credit limit to just above the balance, and stop facility for drawing cash. WHY?? they say as a a "responsible lender" and "in view of current situation" I think it is because once in every 6 months I draw cash and I do not purchase with it therefore they do not collect the normal fees from retailers for providing this service so can only earn from interest rate they charge me. Never paid late fees or over the limit fees. As far as I am concerned I can live without the credit limit being higher than my balance as I make sure the 10% of balance paid I would not need to draw out. My aim is to completely pay them off and close the account and hope others will do the same. As far as I am concerned BARCLAYCARD SUCKS!!!!!

Dylanwing

I can't work it out - They offer 0% deals to new customers, but those customers tend to manage their affairs well and are not that profitable, or just move on once the deal ends. The rest of us who tend to keep a balance on the card each Month get limit cuts and hefty rate rises, allegedly due to 'market conditions'.
They are creating a nice gap in the market for an enterprising lender prepared to accept a small degree of risk to take on all of us disgruntled customers. Just offer a rate linked to Base, no limit reduction guaranteed if account conducted satisfactorily, and use far less vigorous acceptance criteria. I know it will horrify you risk-averse credit card workers, but I think you will find that profits, and opportunities for selling other products will far outweigh any bad debts.

SarahNeedle1872

Dylanwing wrote: »

I can't work it out - They offer 0% deals to new customers, but those customers tend to manage their affairs well and are not that profitable, or just move on once the deal ends. The rest of us who tend to keep a balance on the card each Month get limit cuts and hefty rate rises, allegedly due to 'market conditions'.
They are creating a nice gap in the market for an enterprising lender prepared to accept a small degree of risk to take on all of us disgruntled customers. Just offer a rate linked to Base, no limit reduction guaranteed if account conducted satisfactorily, and use far less vigorous acceptance criteria. I know it will horrify you risk-averse credit card workers, but I think you will find that profits, and opportunities for selling other products will far outweigh any bad debts.

I can see why they offer the 0% deals - they hope that come the end of the offer period, people will forget to change/ can't be bothered to change, and hence they start getting profit from the interest. I am sure there are more people that don't 'tart' their cards than people that do!
I completely agree about the bad debt too - how many times do you go into a bank to pay for something, and they try to sell you five or six other products!?! And in purely simplistic terms, if the risk of bad debts did outweigh the profits/selling opportunities, there wouldn't be so many banks in business (and making HUGE profits)

Dylanwing

Hi Sarahneedle - My point was really that they lose cash to attract new customers and try as hard as possible to p off existing ones. So when these 'new' customers finish the introductory offer, do they hit them with rate rises/ limit cuts as well, as they are now 'existing' customers.

I really get annoyed by the Credit Card "pushers", their target is to get as many applications, often giving you a freebie, but the Card Companies are only looking for good business, so a lot of applicants are rejected. The salesgirl assures you they want your business, but you know full well you will get a rejection letter, even though your credit rating is reasonable.

MacBoy

The original business model of a Credit Card had been corrupted. The 0% deals are nothing more than a 'bait & switch' excercise, subsidised by the less well-able customer, in EXACTLY the same way as our 'free banking' is actually being paid for by customers incurring illegal bank charges.

Once they have got customers snared, the ones that the card company's data miners think won't react are then put on an interest rate escalator to fund the free offers for the more wealthy. Disgraceful usury.

I hope this thread catches Martin's eye.

MacBoy

I can see why they offer the 0% deals - they hope that come the end of the offer period, people will forget to change/ can't be bothered to change, and hence they start getting profit from the interest.

Sarahneedle1872- yes, this is exactly why I have termed it an 'inertia' scam. Do nothing? You get screwed.

Time2Go_25

MacBoy wrote: »

in EXACTLY the same way as our 'free banking' is actually being paid for by customers incurring illegal bank charges.

Are you sure bank charges are illegal?

SarahNeedle1872

Dylanwing wrote: »

Hi Sarahneedle - My point was really that they lose cash to attract new customers and try as hard as possible to p off existing ones. So when these 'new' customers finish the introductory offer, do they hit them with rate rises/ limit cuts as well, as they are now 'existing' customers.I would have thought so! Especially those still carrying a big balance.

I really get annoyed by the Credit Card "pushers", their target is to get as many applications, often giving you a freebie, but the Card Companies are only looking for good business, so a lot of applicants are rejected. The salesgirl assures you they want your business, but you know full well you will get a rejection letter, even though your credit rating is reasonable. Like those stupid Pre-Approved applications that come thru the post, and u still get a rejection letter! Pre-Approved my @^$£!!!

I completely see your point! On a slight tangent, we got a loan application thru the post yesterday... addressed to 'The Occupier'!!!

Sarah x