LLoyds Bank trying it on!

pistonvalve

Hi, my credit card provider, Lloyds, are changing the terms and conditions. What I don't like is their plan to link the interest rate to the bank rate by adding the bank rate to my existing rate! I thought all interest rates directly or indirectly were linked? Cynical maybe, but Lloyd's say they will only add a +ve rate! Is this just a way of inflating their interest charges, I wonder.


Mike. :mad:

20aday

Hello Mike.

No, they aren't trying it on. I had the Lloyds Bank Choice Rewards Duo and had the same letter last year (June/July time).

This has been going on for some time in the Lloyds Banking Group (http://www.theguardian.com/money/2013/dec/09/halifax-credit-cards-links-bank-of-england-base-rate)

Not only that Barclaycard have also started linking to the BoE Interest Rate as of last month.

Consumerist

pistonvalve wrote: »

. . . Lloyd's say they will only add a +ve rate! Is this just a way of inflating their interest charges, I wonder.

Not quite sure what they mean by that but if your card rate is linked to BoE rate and then BoE rate goes down then your card rate should also go down by the same amount.

pistonvalve

If the BoE rate goes -Ve then my basic card rate would reduce - not what Lloyds have in mind!


Mike.

PeacefulWaters

pistonvalve wrote: »

What I don't like is their plan to link the interest rate to the bank rate by adding the bank rate to my existing rate! I thought all interest rates directly or indirectly were linked?

If you thought they were linked, and this means they are now linked, what's the problem?

Cynical maybe, but Lloyd's say they will only add a +ve rate!

Negative bank base rates are an anomaly that really isn't something I'd worry myself with.

Is this just a way of inflating their interest charges, I wonder

Well it will help them as BofE rates rise. And cost them as they fall.

More importantly, it saves them having to send out hundreds of thousands of letters for a piddling 0.25% interest rate change. They can just include it on a statement.

pistonvalve wrote: »

If the BoE rate goes -Ve then my basic card rate would reduce - not what Lloyds have in mind!.

If the BofE rate fell from 0.5% to nothing your credit card rate would reduce by 0.5%.

If it fell from 0.5% to minus 0.25% you would still benefit from 0.5% of the reduction.

Thrugelmir

pistonvalve wrote: »

Is this just a way of inflating their interest charges, I wonder.


Mike. :mad:

It's way of being totally transparent as to how they are set. On a long term basis customers know where they stand and how the rate compares to other offerings. Credit cards are likely to become far more regulated in the future. In the same way the mortgage market was addressed a couple of years back.

cheesetoast

I predict that this is how all credit card interest rates (and possibly overdraft rates too) will be set in future - marketed as "base rate plus 3%" or whatever.