Virgin increasing credit card interest rate by over 5%

marcia_

born_again said:

CliveOfIndia said:

M&S just increased the rate on my card as well.  They're owned by HSBC, so I'm guessing HSBC will soon follow suit - if they haven't already.

Must admit I didn't really take any notice of what the rate was as I always pay in full on all my cards so - as the OP noted - it has no effect whatsoever.  I guess it's only a concern if you're carrying a balance.

M&S money is a financial entity in it's own right. It has it own banking licence. That is not owned by HSBC.

They simply use HSBC systems & some HSBC staff to do back end operations.

I didn't know that. I also thought they were owned by HSBC. Was baffled why M&S gave me a card and HSBC refused. 

CliveOfIndia

born_again said:

CliveOfIndia said:

M&S just increased the rate on my card as well.  They're owned by HSBC, so I'm guessing HSBC will soon follow suit - if they haven't already.

Must admit I didn't really take any notice of what the rate was as I always pay in full on all my cards so - as the OP noted - it has no effect whatsoever.  I guess it's only a concern if you're carrying a balance.

M&S money is a financial entity in it's own right. It has it own banking licence. That is not owned by HSBC.

They simply use HSBC systems & some HSBC staff to do back end operations.

It may be down to semantics, and what the definition of "Owned" actually means.  But as highlighted in this article under "Which balance transfer card is best for me" ... https://www.moneysavingexpert.com/credit-cards/balance-transfer-credit-cards/  ... "you can't transfer a balance between cards from the same bank/group ". 

Apologies if I gave slightly incorrect information, I guess I should have said they're the same group rather than being "owned by".

Superhoopza

Yep Santander increased 5% in January. Seems a very poor practice to do this to existing customers. If they wanted to increase the rate to new customers who have the choice then fair enough but not to existing customers who may have accepted that rate because it works with their budget or whatever the reason for taking credit was.

k12479

Superhoopza said:

Seems a very poor practice to do this to existing customers. If they wanted to increase the rate to new customers who have the choice then fair enough...

That would be very poor practice for them.

The credit quality of their existing customers would deteriorate (because they wouldn't be incentivised to reject the change and stop further spending or to reduce their current spending) with no increased income to compensate. Simultaneously, the quality of their new customers would also deteriorate as the rate would have to be increased further, putting off the better quality ones.

Besides, customers do have a choice - reject the change and stop using it. You can't expect a rate to be maintained forever.

Hoenir

Superhoopza said:

Yep Santander increased 5% in January. Seems a very poor practice to do this to existing customers. If they wanted to increase the rate to new customers who have the choice then fair enough but not to existing customers who may have accepted that rate because it works with their budget or whatever the reason for taking credit was.

Fixed rate products are available. Borrow at a floating rate you have to take the rough with the smooth. Consumers have no grounds to complain. 

blue.peter

Superhoopza said:

Yep Santander increased 5% in January.

That increase is not universal. I got my letter from them a couple of days ago. For  me:

• the increase is 2% (21.9% to 23.9%);
• the effective date is 22 May.

I think that interest rates charged vary from one customer to another.

As with some other posters to this thread, the interest rate is of purely academic interest for me, since I have a DD set up to pay the full balance on my cards every month.

Superhoopza

k12479 said:

Superhoopza said:

Seems a very poor practice to do this to existing customers. If they wanted to increase the rate to new customers who have the choice then fair enough...

That would be very poor practice for them.

The credit quality of their existing customers would deteriorate (because they wouldn't be incentivised to reject the change and stop further spending or to reduce their current spending) with no increased income to compensate. Simultaneously, the quality of their new customers would also deteriorate as the rate would have to be increased further, putting off the better quality ones.

Besides, customers do have a choice - reject the change and stop using it. You can't expect a rate to be maintained forever.

So you're saying the way to incentivise customers to reduce their credit balance is to pump up their rate? 

Please define better quality customer for a credit customer? Better as in pays off their bill each month and incurs no interest? That would be a bad type of customer for the creditor.

Reject the change and be on an arrangement to pay scheme which will damage their credit history for 6+ years, all because the creditor changed their rates?

Superhoopza

Hoenir said:

Superhoopza said:

Yep Santander increased 5% in January. Seems a very poor practice to do this to existing customers. If they wanted to increase the rate to new customers who have the choice then fair enough but not to existing customers who may have accepted that rate because it works with their budget or whatever the reason for taking credit was.

Fixed rate products are available. Borrow at a floating rate you have to take the rough with the smooth. Consumers have no grounds to complain. 

So they can do what they want and that's fine because it's 'in their terms'. Hope you don't encounter any unforeseen issues and when you need help people just quote terms and conditions and hindsight to you whilst you struggle.

MorningcoffeeIV

Superhoopza said:

Reject the change and be on an arrangement to pay scheme which will damage their credit history for 6+ years, all because the creditor changed their rates?

There would be no AP on rejecting the rate.

Superhoopza

MorningcoffeeIV said:

Superhoopza said:

Reject the change and be on an arrangement to pay scheme which will damage their credit history for 6+ years, all because the creditor changed their rates?

There would be no AP on rejecting the rate.

Good to know, because the communication from santander said if I rejected the rate increase, the card would be stopped and a payment plan set in place to pay off the balance. I took that as being an arrangement to pay.