Post Office Money - Interest Rates

rubble2

Got two emails from Post Office money on Friday relating to the interest rates on two of their financial products.

I had a savings account with them which I had already run down due to getting better rates elsewhere, anyway got a notification that they were further reducing the interest payable on this account - I can understand this (sort of) with BoE base rate recently being reduced.

The second notification was about the interest payable on my Post Office Credit Card which was increasing form 18.5% to 20.5% . As I always pay this off in full each month it doesn't actually impact me.
How can they use the reduced base rate as a reason to reduce the interest payable on a savings account and on the same day increase the interest payable on a credit card?

takman

It could be due to the cap in Debit and Credit Card interchange fees being implemented. This will mean that they will get less money from people making purchases on the card 's are trying to make more money from interest.

But it could also be the way you are personally using the card because they still advertise the 18.9% interest rate on their website.

rubble2

takman wrote: »

It could be due to the cap in Debit and Credit Card interchange fees being implemented. This will mean that they will get less money from people making purchases on the card 's are trying to make more money from interest.

But it could also be the way you are personally using the card because they still advertise the 18.9% interest rate on their website.

Interesting, is it normal for CC providers to increase interest rates on accounts that are always paid in full? because increasing the interest payable is only going to make me even more determined to ensure full payment each month.

Also, at the same time as this increase in interest rates I have an offer from PO for 0% balance transfer for 24 months. Seems to lack any sort of logic to me.

shaun_from_Africa

takman wrote: »

But it could also be the way you are personally using the card because they still advertise the 18.9% interest rate on their website.

As with all credit cards and loans, the figures given on websites and other adverts are generally suffixed with the word "representative" which means that the figure is only an example.

The PO is no different.
If you look at their credit card webpage, it states:

Representative Example
18.9% APR Representative (variable)

and then on the summary page for card details you get:

Representative 18.9% APR (variable)
Rates from 18.9% APR to 22.9% APR, depending on individual circumstances