Credit cards: what issues should MSE be raising with the industry?

Gandalf644

MattMattMattUK said:

On this I would like to a change so that the minimum payment must be high enough to ensure the balance transfer is cleared by the end of the interest free period, so on a one year interest free transfer the minimum payment must be 1/12th of the starting amount every month.

The banks won't want that! They want customers to pay interest by luring them in with the interest free period.

What I would like to see are 'continuous payment authorities' on a credit card account being available to view in one's online account, so customers can be reminded what they have set up a CPA for and when it is again due and be able cancel in good time if necessary.

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sausage_time

Good point on CPA @Gandalf644

MattMattMattUK

Gandalf644 said:

MattMattMattUK said:

On this I would like to a change so that the minimum payment must be high enough to ensure the balance transfer is cleared by the end of the interest free period, so on a one year interest free transfer the minimum payment must be 1/12th of the starting amount every month.

The banks won't want that! They want customers to pay interest by luring them in with the interest free period.

I agree, but there are lots of things the banks do not want that the regulator forces upon them.

Gandalf644 said:

What I would lie to see are 'continuous payment authorities' on a credit card account being available to view in one's online account, so customers can be reminded what they have set up a CPA for and when it is again due and be able cancel it good time if necessary.

I think this would be a good idea, I am unsure why they are not already and I am also unsure why banks make it so difficult to cancel them. 

DullGreyGuy

ForumUser7 said:

Dandytf said:

Ban Plastic Cards if they haven't already done so.
Increase Min repayments from day 1, Not everyone repays in full each time.
Promote Digital alternatives during Application.

I suppose more metal credit cards on the UK market would always be nice!

Are there any purely metal cards @forumuser7? The AmEx Platinum has a metal front but a plastic back, had somewhat assumed the others are the same, certainly Mondzo has complaints of the two parts separating. 



As to the OP... most banks only have three payment options, full balance, minimum payment or set amount. Whilst these work for me now I'm financially secure etc when younger it would have been nice to be able to set other options like minimum + £X or a % of balance.

I think companies could do a lot better in the App/Website in showing the split of your different balances and when promotional periods are ending. 

Nasqueron

fergie_ said:

Can you ask them about the increasing 'fees' for 'interest free' balance transfers. Some are around the 5% mark - potentially for less than a year. Are they really just front-loaded interest in another guise?

Yes and no - one reason front loading interest was banned was you paying interest on interest and not clearing capital. With a BT you do get the fee but you don't pay interest on it or on the balance so it's more akin to doing a BT with 0% fee but paying a low rate of interest which can sometimes work out cheaper.

cymruchris

A standardisation of balance transfer/money transfer fees.

Across different providers (and sometimes even within a providers own customer base) and credit profiles it appears that some people get 'offers' with a 2.5% fee - and others have a 5% fee - or anywhere in between. If the fee is really a fee - shouldn't it be the same for everyone? It feels as though customers perceived as potentially higher risk pay a higher 'fee' than those who are perceived as a low risk.

Nasqueron

cymruchris said:

A standardisation of balance transfer/money transfer fees.

Across different providers (and sometimes even within a providers own customer base) and credit profiles it appears that some people get 'offers' with a 2.5% fee - and others have a 5% fee - or anywhere in between. If the fee is really a fee - shouldn't it be the same for everyone? It feels as though customers perceived as potentially higher risk pay a higher 'fee' than those who are perceived as a low risk.

The fee is based on a risk assessment and credit profile, standardising fees would simply result in lenders pulling deals, no different from credit limits, APR offered etc 

cymruchris

Nasqueron said:

cymruchris said:

A standardisation of balance transfer/money transfer fees.

Across different providers (and sometimes even within a providers own customer base) and credit profiles it appears that some people get 'offers' with a 2.5% fee - and others have a 5% fee - or anywhere in between. If the fee is really a fee - shouldn't it be the same for everyone? It feels as though customers perceived as potentially higher risk pay a higher 'fee' than those who are perceived as a low risk.

The fee is based on a risk assessment and credit profile, standardising fees would simply result in lenders pulling deals, no different from credit limits, APR offered etc 

Shouldn't a 'fee' be for completing a task? The work involved in carrying out that task would be the same for person A, B or C? If the 'fee' is based on credit profile and risk - then isn't that a sneaky form of additional interest?

DullGreyGuy

cymruchris said:

A standardisation of balance transfer/money transfer fees.

Across different providers (and sometimes even within a providers own customer base) and credit profiles it appears that some people get 'offers' with a 2.5% fee - and others have a 5% fee - or anywhere in between. If the fee is really a fee - shouldn't it be the same for everyone? It feels as though customers perceived as potentially higher risk pay a higher 'fee' than those who are perceived as a low risk.

So let's standardise it at 7.5%? That'd be fair because they are all the same then right?


It should be subject to competitive pressure, it's how we have gotten to such low fees in the first place. People should have choice of a range of products some may have a lower fee but lower duration and others a higher fee bt longer duration. 

Two companies doing the same job do not incur the same costs. Back in the days of mailing policy books to a customer we, as part of a larger group, had an automatic machine that automatically printed the letter/schedule, put the right inserts into the envelope and sorted it into bags based on postcode sector paying UK Mail very little to collect post 3 times a day. Tiny cost to run, but massive investment up front. 

A second client had a post girl, she had to collect the letters from the printer and scan the barcode. The computer then told her what inserts were required which she then had to fetch each of those and scan them too. Once all were scanned an envelope would print which she'd put the contents into and put it through the franking machine. Royal Mail came once a day to collect the single unsorted sack. Running costs vastly higher but a modest investment in the software/tools. 

That assume that the fee is there only to cover OpEx, it can also be to cover risk margin 

cymruchris

DullGreyGuy said:

cymruchris said:

A standardisation of balance transfer/money transfer fees.

Across different providers (and sometimes even within a providers own customer base) and credit profiles it appears that some people get 'offers' with a 2.5% fee - and others have a 5% fee - or anywhere in between. If the fee is really a fee - shouldn't it be the same for everyone? It feels as though customers perceived as potentially higher risk pay a higher 'fee' than those who are perceived as a low risk.

So let's standardise it at 7.5%? That'd be fair because they are all the same then right?


It should be subject to competitive pressure, it's how we have gotten to such low fees in the first place. People should have choice of a range of products some may have a lower fee but lower duration and others a higher fee bt longer duration. 

Two companies doing the same job do not incur the same costs. Back in the days of mailing policy books to a customer we, as part of a larger group, had an automatic machine that automatically printed the letter/schedule, put the right inserts into the envelope and sorted it into bags based on postcode sector paying UK Mail very little to collect post 3 times a day. Tiny cost to run, but massive investment up front. 

A second client had a post girl, she had to collect the letters from the printer and scan the barcode. The computer then told her what inserts were required which she then had to fetch each of those and scan them too. Once all were scanned an envelope would print which she'd put the contents into and put it through the franking machine. Royal Mail came once a day to collect the single unsorted sack. Running costs vastly higher but a modest investment in the software/tools. 

That assume that the fee is there only to cover OpEx, it can also be to cover risk margin 

But one company that has the same costs shouldn't have a two (or three or four) tiered system for fee percentages as happens. There are posts on the board where people from the same provider are offered different fees - that can't be just operational expenditure.

These 'Fees' have also been creeping upwards.

If the 'fee' is only for OpEx - then within one organisation should be the same for all customers. If there's an element of 'this customer is a higher/lower risk' so 'we are going to charge more/less' then to me it's no longer a 'fee' - then there must be '£££'s to cover risk margin, and to me that then goes beyond being a 'fee'.

Maybe the 'Fee' should be a flat 3 percent - and anything above classed as something else - so consumers know the cost of the transfer, and also know that they are being risk profiled higher, and is a form of insurance for the lender. It really begins to stink of not being a zero percent deal if the fee has crept up compared to other customers of the same bank.

To be fair I'm confident none of this will ever happen, and nothing will change - but a discussion around how customers at the same provider can be charged differing fees for the same thing is certainly worthwhile raising.