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

born_again

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.

Won't happen as it is a commercial decision by each provider on the charges.
Just the same as any loan or other product you can get.

Nasqueron

cymruchris said:

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?

The fee is based on risk assessment and credit profile - charge more for the people who are more likely to miss payments to balance risk, charge less for safe customers. I get different offers from different lenders on the same profile - even in group e.g. Halifax is 5% for me, 12 months 0%, Lloyds same % but 15 months. Barclays typically 3.3% offers for me up to 18 months, sometimes 24. There are cards with 0% fee too. Standardised fees will make them go up, guaranteed. Same as Martin managed to do for overdrafts where he campaigned to get rid of fixed daily fees and swapped to interest instead so all the banks whacked the rates up to about 40% as was entirely predictable - a standardised fee will be 5%+

WillPS

I wouldn't be pushing for any sort of fee standardisation to be totally honest. Far bigger a problem in my view is the 'up to' deals where you might end up being offered something far worse than what you applied for.

I tend to believe if issuers didn't have the (legal) 'bait and switch' option and instead had to decline the ineligible then more would be accepted for the headline rate.

kimwp

Martico said:

You might find it worthwhile also asking this question on the debt-free wannabe subforum, where people are on the sharp end of all things credit

I've posted a link to this thread on the DFW board.

SamDude

I don't use my Amex card so much, but if you have a direct debit in place to pay the balance - why do they collect it ~2 weeks before the payment date (as opposed to a day or two before)?

I think they've said it is to give customers a chance to have enough funds to prevent issues/late payments - but no other utilities/services do this "just in case". They are essentially depriving customers of their money before it is due to be collected.

CliveOfIndia

SamDude said:

They are essentially depriving customers of their money before it is due to be collected.

To be pedantic, they're not depriving you of "your" money.  They are simply recouping the money they've lent to you - the money was never yours in the first place.

SamDude

CliveOfIndia said:

SamDude said:

They are essentially depriving customers of their money before it is due to be collected.

To be pedantic, they're not depriving you of "your" money.  They are simply recouping the money they've lent to you - the money was never yours in the first place.

Ok then - they are taking their money sooner than they state it needs to be paid by as per the monthly statement.
This is why I don't pay Amex by direct debit, but by debit card on the day the repayment is due.

zagfles

MattMattMattUK said:

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.

And you really think they'll continue offering interest free deals which they make a loss on during the interest free period if they have no opportunity to recover that loss at the end of the term

Nasqueron

SamDude said:

CliveOfIndia said:

SamDude said:

They are essentially depriving customers of their money before it is due to be collected.

To be pedantic, they're not depriving you of "your" money.  They are simply recouping the money they've lent to you - the money was never yours in the first place.

Ok then - they are taking their money sooner than they state it needs to be paid by as per the monthly statement.
This is why I don't pay Amex by direct debit, but by debit card on the day the repayment is due.

Amex might be unusual in that sense but not a chance they would even look at any request from MSE to change this. 

MattMattMattUK

zagfles said:

MattMattMattUK said:

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.

And you really think they'll continue offering interest free deals which they make a loss on during the interest free period if they have no opportunity to recover that loss at the end of the term

I do not really care, I think that the system as set out by the regulator should be designed to reduce long term consumer debt. The interest free periods would continue, however the upfront feel would change based on the total overall cost, that should not be difficult to understand.