Tesco Credit Card huge rate increase

true_blue_2

I knew once Barclays brought their taint to Tesco it was only a matter of time my card would become as rubbish as their own, but thought I had more time than this, and that it would happen gradually.
They've written to me today to tell me that my rates are near enough doubling from 6.9% to 13.032% "to reflect the increased cost of providing my card".
Is there any way I can contest this?
If not, can anyone recommend an alternative? I am not in full-time employment, so switching won't be easy. But my credit score with Experian is 971/999, I'm not in any debt and have an ISA + other savings. 
Still, I'm guessing I'll need to wait until I am back to full-time work and then give it 6 months before applying for something that will match my current Tesco rate of 6.9%?

Cheers

oldernonethewiser

Your Experian score is irrelevant.

Have you tried the MSE eligibility tool?

https://www.moneysavingexpert.com/eligibility/credit-cards/search/

eskbanker

true_blue_2 said:

I'm not in any debt and have an ISA + other savings.

So are you in a position to settle your monthly credit card statements in full, which would render the increased interest rate irrelevant?

DullGreyGuy

true_blue_2 said:

I knew once Barclays brought their taint to Tesco it was only a matter of time my card would become as rubbish as their own, but thought I had more time than this, and that it would happen gradually.
They've written to me today to tell me that my rates are near enough doubling from 6.9% to 13.032% "to reflect the increased cost of providing my card".
Is there any way I can contest this?
If not, can anyone recommend an alternative? I am not in full-time employment, so switching won't be easy. But my credit score with Experian is 971/999, I'm not in any debt and have an ISA + other savings. 
Still, I'm guessing I'll need to wait until I am back to full-time work and then give it 6 months before applying for something that will match my current Tesco rate of 6.9%?

Depends on the terms of you agreement and if the 6.9% was some form of promotional rate or not. Most will allow rate increases but 13% is still very low in today's market unless you are comparing it to short term 0% promotions that typically come with a transfer fee. 

TadleyBaggie

13% is a relatively low rate. 

Nasqueron

Numerous banks have been upping rates, nothing to do with Barclays being involved with Tesco. As any MSE person should know though, you pay off in full every month and pay no interest so the APR is meaningless. Most cards these days seem to advertise 25-30% so 13% is good going

retiredbanker1

13% is low - approximately half what a lot of lenders are charging.

There is a way to contest it but you will need to stop using the card - it will be closed down after you repay.
Instructions should have been sent to you with your letter.

jimjames

true_blue_2 said:

I knew once Barclays brought their taint to Tesco 

Barclays have nothing to do with Tesco (yet), it hasn't happened and isn't expected until 2nd half of 2024

https://www.tescobank.com/tesco-bank-update/

13% is an excellent credit card rate, most are at least double that but if you have savings it still makes no sense running a credit card balance and not paying it off every month.

true_blue_2

Thanks all for replying
Yes, I know credit scores are irrelevant to the banks, but they still give people on here an idea about my situation. 

I get that if I pay off my card then interest isn't applied, of course. I also know that 13% is mid-low these days, but it still annoys me that they're doubling the rates by August 2024. Seems a bit excessive, and if Barclays have nothing to do with them yet, then why are they doing it? If they needed to make such a big change to a product so soon before a takeover, then they'd of course have consulted with the new owners. So I don't believe that it's nothing to do with Barclays, but we are also currently in a bad climate. Anyway, the reason doesn't really matter. I'll keep the card for now, but I've had the card since 2018 and in that whole time the APR has only raised by 1%, so I am of course a bit shocked. BTW, no it was not a promotional rate.

About my question not making sense to some... I am financially stable right now, but I have been battling illness for a long time, some weeks I am unable to do any work at all, so my income is very inconsistent. Having a low APR card has been a lifeline for me at times. I would quite literally have been on the streets (at best) without a credit card in the past, where I've had to take the interest hit for a while until I was better off. So it does stress me knowing that lifeline is being taken away. I hope that explains where I'm coming from. 

Sounds like there's nothing I can do other than closing the card so I will try out the MSE tool also.

Cheers all

eskbanker

true_blue_2 said:

I get that if I pay off my card then interest isn't applied, of course. I also know that 13% is mid-low these days, but it still annoys me that they're doubling the rates by August 2024. Seems a bit excessive, and if Barclays have nothing to do with them yet, then why are they doing it? If they needed to make such a big change to a product so soon before a takeover, then they'd of course have consulted with the new owners. So I don't believe that it's nothing to do with Barclays, but we are also currently in a bad climate. Anyway, the reason doesn't really matter. I'll keep the card for now, but I've had the card since 2018 and in that whole time the APR has only raised by 1%, so I am of course a bit shocked. BTW, no it was not a promotional rate.

About my question not making sense to some... I am financially stable right now, but I have been battling illness for a long time, some weeks I am unable to do any work at all, so my income is very inconsistent. Having a low APR card has been a lifeline for me at times. I would quite literally have been on the streets (at best) without a credit card in the past, where I've had to take the interest hit for a while until I was better off. So it does stress me knowing that lifeline is being taken away. I hope that explains where I'm coming from. 

Sounds like you're seeing it as a macro-level product change but in all likelihood, they're increasing your rate, rather than doing so across the board - if your income is very inconsistent and you're not in full time employment, then this may be visible to them and they're simply reflecting the increased risk of lending to you in such circumstances?

DullGreyGuy

true_blue_2 said:

Thanks all for replying
Yes, I know credit scores are irrelevant to the banks, but they still give people on here an idea about my situation. 

I get that if I pay off my card then interest isn't applied, of course. I also know that 13% is mid-low these days, but it still annoys me that they're doubling the rates by August 2024. Seems a bit excessive, and if Barclays have nothing to do with them yet, then why are they doing it? If they needed to make such a big change to a product so soon before a takeover, then they'd of course have consulted with the new owners. So I don't believe that it's nothing to do with Barclays, but we are also currently in a bad climate. Anyway, the reason doesn't really matter. I'll keep the card for now, but I've had the card since 2018 and in that whole time the APR has only raised by 1%, so I am of course a bit shocked. BTW, no it was not a promotional rate.

About my question not making sense to some... I am financially stable right now, but I have been battling illness for a long time, some weeks I am unable to do any work at all, so my income is very inconsistent. Having a low APR card has been a lifeline for me at times. I would quite literally have been on the streets (at best) without a credit card in the past, where I've had to take the interest hit for a while until I was better off. So it does stress me knowing that lifeline is being taken away. I hope that explains where I'm coming from. 

Sounds like there's nothing I can do other than closing the card so I will try out the MSE tool also.

Cheers all

13% is low, not mid to low. mid these days is over 20% and ever 30% is no longer sub-prime levels. 

They cannot consult their future owner, that would breach competition law, until they merge they are legally still competitors and can only share things that are strictly necessary to ensure they can remain legally operation at the moment of merger or things that they'd happily share with anyone. 

Having done merger work in the past there is a fair bit of hiring consultants who can independently look at the corporately sensitive data of both companies and, for example, confirm that the outputs of the two SolvencyII models can be combined 

You'd need to know the terms of the deal, the companies positions etc to try and predict why it's done. With one deal I did the contract stated how the deal would be priced and had an estimated purchase price; in principle actions could be taken between signing the deal and the price being trued up that would give favourable results. Alternatively their capital could be a touch low or they hope for a big new customer drive so need capital (new customers could increase the price) but people may not be too interested in giving capital to a company about to be bought so increasing interest rates could free-up capital (never done banking calculations but imagine modest increases generate more future revenues that offset the increased default rate etc)