JaJa credit card unexplained closure of account 3 March at 9:58AM in Credit cards 142 replies 40.9K views

*California*

That's not true!

I was moved from Bank of Ireland to the current provider.

There is no reason why the same cannot happen now.

They could contact other providers and ask them.

I wonder if they have done it...

It would be a shame if there is someone who would be happy to take over but had no chance to do it.

The simplest thing would be to transfer me to someone else.

WillPS

CliveOfIndia said:

WillPS said:

CliveOfIndia said:

WillPS said:

CliveOfIndia said:

WillPS said:

CliveOfIndia said:

The fact that you pay no interest is neither here nor there - any card issuer will still get plenty of income from the merchant fees they rake in every time you use the card.

It's a commercial decision by the card issuer, end of story.  It's nothing personal.

Why are you still peddling this myth? The amount of money that any UK Visa or Mastercard issuer AND Visa or Mastercard get from a UK merchant is (no more than) 0.3% combined. 

It's not a myth, it's fact.  May I ask if you've ever worked for a bank or credit card issuer?  I have done for the majority of my working life.

I'm not disputing the fact that customers who do pay interest add to a card issuer's income stream.  But if you don't pay interest, that doesn't make you an unwanted customer.  0.3% of the billions of pounds that are collectively spent on credit cards every month is a not insignificant sum.

One source of figures, if you're interested: https://www.ukfinance.org.uk/data-and-research/data/card-spending

"There were 355.1 million credit card transactions in November [2022], 0.3 per cent more than in November 2021. The total spend of £19.6 billion was 5.3 per cent higher than November 2021.

Perhaps with your depth of knowledge you can tell us what the cost of getting a physical card printed, stuck to a letter and delivered to customers, for starters. Perhaps you could additionally tell us the ratio of customer service staff to customers, and what the resultant blended cost per customer is?

Your maths also completely ignores the fact that the 0.3% is paid not to the issuer but to Visa/Mastercard, who in turn pay the issuer a commission - but most certainly this is not 100% of that 0.3%, otherwise Visa/Mastercard would earn nothing. But lets ignore that and go with 0.3% accepting that is an overestimation.

How much does the customer need to spend in order to generate sufficient interchange derived revenue cover the cost of a physical card being provided?

Same for that blended customer service cost?

And for a bit of Friday fun, how about managing the risk of S75 liability - how much revenue from every £ do you expect to have to subsequently pay back to the customer?

Bear in mind that the cost of providing the credit to a customer is the same whether they are a "full-repayer" or a "balance-carrier".  S75 claims - likewise, that's unrelated to what we're talking about here.

At the risk of repeating myself - no-one is disputing that interest payments provide revenue to a bank.  The nub of the argument is that paying in full every month is not a reason - in and of itself - to close a customer's account, it doesn't mean that the bank isn't still making a decent amount of money from the customer.  If that were the case, every customer of every bank in the country who is a regular "full-repayer" would be having their accounts closed - and that is clearly not happening.

There are many reasons why a particular lender may decide to reduce or re-profile its customer-base, but the argument that paying in full is not profitable to a lender is simply not true.

There is no money at all to be made from a customer who uses their card in the UK alone and always pays their bill in full

So please explain why the (approximately) 50% of cardholder in the UK who do pay their balances in full have not all had their accounts closed.

JaJa appears to be one provider who, for whatever reason, are closing a lot of accounts.  But the majority of other lenders seem to be perfectly happy to keep their "always-pay-in-full" customers.

Because there are other ways for most lenders to earn money, even in these circumstances:

• Cross selling other profitable products (using their credit cards as a loss leader)
• Marketing potential of purchase data when taken in consideration of other products held.
  
• Monthly or annual fees
• FX fees
  
• Affinity schemes (typically arranged on a % comission at the named brand basis)
• 'On card' cashback schemes (where specific retailers will pay a comission on spend for certain period)

Note that none of these apply to the Jaja cards which are being closed down.

As pointed out before, Current Accounts are also very difficult to make money from unless the customer pays a fee or goes overdrawn.

WillPS

*California* said:

That's not true!

I was moved from Bank of Ireland to the current provider.

There is no reason why the same cannot happen now.

They could contact other providers and ask them.

I wonder if they have done it...

It would be a shame if there is someone who would be happy to take over but had no chance to do it.

The simplest thing would be to transfer me to someone else.

Relies on there being a buyer though doesn't it. Bank of Ireland wanted out (presumably they too could not make money from it!) and Jaja were the only taker (or at least there were no reports of a bidding war).

Jaja are keeping the profitable accounts for themselves - who would want the unprofitable stuff?

*California*

They can transfer out for free or even pay something to another provider to transfer out.

Marchitiello

As a reference point about the calculations being quoted above, when Lloyds bought MBNA card business for £1.9 billions included a 7 million customers portfolio with £7billions of credit card debts and about £300 millions of  running cost 

WillPS

*California* said:

They can transfer out for free or even pay something to another provider to transfer out.

Why would Jaja pay when they can bin you off for nowt?

Morrero

I received the email yesterday (hadn’t heard anything about it as I don’t live in the UK anymore). I’d been a PO customer for 15* years and use the card pretty much daily for all my expenses but generally clear the balance each month so tend to pay very little interest each year. Could honestly have done without the hassle of trying to find a new provider where I live now but not a whole lot I can do about it.

thanksmartin

Both me and my partner had this closure email. Furious, my partner raised a complaint and 1 week later got 3-4 page letter saying nothing more to explain their decision. I suspect their reason is to do with stopping the free exchange rates on spending abroad. I expect it only affect customers transferred from the post office. I am about to complain to them and get my 3-4 page of nothing, at least it will inconvenience them just as it has me.

MattMattMattUK

thanksmartin said:

Both me and my partner had this closure email. Furious, my partner raised a complaint and 1 week later got 3-4 page letter saying nothing more to explain their decision. I suspect their reason is to do with stopping the free exchange rates on spending abroad. I expect it only affect customers transferred from the post office. I am about to complain to them and get my 3-4 page of nothing, at least it will inconvenience them just as it has me.

Why choose to be furious and waste time complaining? It is a commercial decision, just use and/or apply for a different card and move on.

IanManc

thanksmartin said:

Both me and my partner had this closure email. Furious, my partner raised a complaint and 1 week later got 3-4 page letter saying nothing more to explain their decision. I suspect their reason is to do with stopping the free exchange rates on spending abroad. I expect it only affect customers transferred from the post office. I am about to complain to them and get my 3-4 page of nothing, at least it will inconvenience them just as it has me.

Complaining won't affect the people who made the decision to close the cards, and it definitely won't "inconvenience them".