John Lewis CC - reality check please - reduced credit days?

jayef

According to information on CompareTheMarket:
"Credit card providers have a legal requirement to send you your credit card statement at least 21 days before your payment due date.".

Does this no longer apply? Or are NewDay now (and previously?) acting illegally? If I interpret this correctly they are only allowing 15 days. I don't see how they can be allowed to take your DD 5 days before that, effectively reducing the period to 10 days for those of us (most?) who pay on time. 

Be grateful for any confirmation if the above is (or isn't) the law. 

NewDay are a really poor company for JL to choose to manage their card. I have been refused a perfectly reasonable credit limit increase a number of times over the past year ... "Computer says no" and they won't let you talk to anyone.

WillPS

Nasqueron said:

errolthecat said:

I have several credit cards - Sainsburys, Virgin, Barclaycard and Virgin Money - all paid off in full by DD each month (so not a 'good' i.e. profit-earning customer for the credit card company). With the new proposal from NewDay I'll get 2 weeks less time for my savings to sit earning interest than for any of the others. The best is First Direct with nearly 4 weeks after the statement date. I was using the JL card for both usual monthly spend and big ticket items, e.g. holidays, due to getting JL reward vouchers (which have also been downgraded in the last six months), but will now move this spend to FD which has a similar credit limit to my JL card. I don't see why I should pay early for having a DD set up which must give NewDay a little more security than waiting to see if I pay up - although they would probably like me to pay less and pay late for more profit!

I also object to having my statement date and payment date moved unilaterally by the credit card company when I set them up in the first place to suit my monthly income pattern.

They earn every time you make a purchase, if they don't offer any perks like cashback (Sainsbury's is arguable as it's nectar but of course that makes you go into their stores) then they offer the card because they make money

Whatever 'they' (presuming you mean the issuer) earn is capped at 0.3% for UK cards spent in the UK - and it'll be less than that otherwise Visa/Mastercard would earn nothing, unless there's some kind of commission payable (i.e. it's reasonable to assume JLP pay NewDay when the Partnership card is used in JL/Waitrose; same for Asda/Jaja etc).

If you assume 0.25% (and there's good reason to), and an annual spend of £5k, that's a whopping £12.50 they've earnt. When you factor in the cost of card issuance (~£5 a pop), other written materials sent by post (~£1 a pop), cost of borrowing for the interest-free period and the cost of providing a usable service it's more or less impossible to make a profit on this type of spending paid in full. 

This is before you consider the risk the issuer has to take on each time you use the card with regards to S75 of the Consumer Credit Act, or the costs associated with accepting a payment (which will vary from nothing to 0.5% depending on the method used... easy to see why debit card payment is slowly becoming a thing of the past).

@errolthecat is absolutely right to identify that their credit card usage is unlikely to be profitable for their issuers.

SuperAllyB

jayef said:

According to information on CompareTheMarket:
"Credit card providers have a legal requirement to send you your credit card statement at least 21 days before your payment due date.".

Does this no longer apply? Or are NewDay now (and previously?) acting illegally? If I interpret this correctly they are only allowing 15 days. I don't see how they can be allowed to take your DD 5 days before that, effectively reducing the period to 10 days for those of us (most?) who pay on time. 

Be grateful for any confirmation if the above is (or isn't) the law. 

NewDay are a really poor company for JL to choose to manage their card. I have been refused a perfectly reasonable credit limit increase a number of times over the past year ... "Computer says no" and they won't let you talk to anyone.

The payment due date is still within the rules, it's your choice to pay by direct debit and if you continue to do so, you'll have to accept that the "free credit" period is reduced by 5 days.

jayef

My statement date has moved to the 31st of the month (silly date!). My payment due date is  now the 15th of the month. That is NOT 21 days is it??? Or am i misunderstanding something. 

Those dates have each been moved by 6 days so basically it was only 15 days (and illegal?) before?

Phoenix72

jayef said:

My statement date has moved to the 31st of the month (silly date!). My payment due date is  now the 15th of the month. That is NOT 21 days is it??? Or am i misunderstanding something. 

Those dates have each been moved by 6 days so basically it was only 15 days (and illegal?) before?

What do you mean by 'due date'? The date the DD will be taken or the last date payment must be received by?

SuperAllyB

jayef said:

My statement date has moved to the 31st of the month (silly date!). My payment due date is  now the 15th of the month. That is NOT 21 days is it??? Or am i misunderstanding something. 

Those dates have each been moved by 6 days so basically it was only 15 days (and illegal?) before?

Sorry, I managed to combine information from your first post and a previous one from someone else when replying earlier.  I can't comment on the legality.

Nasqueron

WillPS said:

Nasqueron said:

errolthecat said:

I have several credit cards - Sainsburys, Virgin, Barclaycard and Virgin Money - all paid off in full by DD each month (so not a 'good' i.e. profit-earning customer for the credit card company). With the new proposal from NewDay I'll get 2 weeks less time for my savings to sit earning interest than for any of the others. The best is First Direct with nearly 4 weeks after the statement date. I was using the JL card for both usual monthly spend and big ticket items, e.g. holidays, due to getting JL reward vouchers (which have also been downgraded in the last six months), but will now move this spend to FD which has a similar credit limit to my JL card. I don't see why I should pay early for having a DD set up which must give NewDay a little more security than waiting to see if I pay up - although they would probably like me to pay less and pay late for more profit!

I also object to having my statement date and payment date moved unilaterally by the credit card company when I set them up in the first place to suit my monthly income pattern.

They earn every time you make a purchase, if they don't offer any perks like cashback (Sainsbury's is arguable as it's nectar but of course that makes you go into their stores) then they offer the card because they make money

Whatever 'they' (presuming you mean the issuer) earn is capped at 0.3% for UK cards spent in the UK - and it'll be less than that otherwise Visa/Mastercard would earn nothing, unless there's some kind of commission payable (i.e. it's reasonable to assume JLP pay NewDay when the Partnership card is used in JL/Waitrose; same for Asda/Jaja etc).

If you assume 0.25% (and there's good reason to), and an annual spend of £5k, that's a whopping £12.50 they've earnt. When you factor in the cost of card issuance (~£5 a pop), other written materials sent by post (~£1 a pop), cost of borrowing for the interest-free period and the cost of providing a usable service it's more or less impossible to make a profit on this type of spending paid in full. 

This is before you consider the risk the issuer has to take on each time you use the card with regards to S75 of the Consumer Credit Act, or the costs associated with accepting a payment (which will vary from nothing to 0.5% depending on the method used... easy to see why debit card payment is slowly becoming a thing of the past).

@errolthecat is absolutely right to identify that their credit card usage is unlikely to be profitable for their issuers.

End of the day, card issuers wouldn't give people like me credit cards if they didn't make money/were losing money, yet they do. This post is simply incorrect e.g. the idea that they issue a card every year (wrong - most are issued with 3-4 years validity), or that they pay £1 a time for posting and printing the card paperwork (a one off cost, most of it comes with the card that you have double accounted for in your £5 and £1). 

WillPS

Nasqueron said:

WillPS said:

Nasqueron said:

errolthecat said:

I have several credit cards - Sainsburys, Virgin, Barclaycard and Virgin Money - all paid off in full by DD each month (so not a 'good' i.e. profit-earning customer for the credit card company). With the new proposal from NewDay I'll get 2 weeks less time for my savings to sit earning interest than for any of the others. The best is First Direct with nearly 4 weeks after the statement date. I was using the JL card for both usual monthly spend and big ticket items, e.g. holidays, due to getting JL reward vouchers (which have also been downgraded in the last six months), but will now move this spend to FD which has a similar credit limit to my JL card. I don't see why I should pay early for having a DD set up which must give NewDay a little more security than waiting to see if I pay up - although they would probably like me to pay less and pay late for more profit!

I also object to having my statement date and payment date moved unilaterally by the credit card company when I set them up in the first place to suit my monthly income pattern.

They earn every time you make a purchase, if they don't offer any perks like cashback (Sainsbury's is arguable as it's nectar but of course that makes you go into their stores) then they offer the card because they make money

Whatever 'they' (presuming you mean the issuer) earn is capped at 0.3% for UK cards spent in the UK - and it'll be less than that otherwise Visa/Mastercard would earn nothing, unless there's some kind of commission payable (i.e. it's reasonable to assume JLP pay NewDay when the Partnership card is used in JL/Waitrose; same for Asda/Jaja etc).

If you assume 0.25% (and there's good reason to), and an annual spend of £5k, that's a whopping £12.50 they've earnt. When you factor in the cost of card issuance (~£5 a pop), other written materials sent by post (~£1 a pop), cost of borrowing for the interest-free period and the cost of providing a usable service it's more or less impossible to make a profit on this type of spending paid in full. 

This is before you consider the risk the issuer has to take on each time you use the card with regards to S75 of the Consumer Credit Act, or the costs associated with accepting a payment (which will vary from nothing to 0.5% depending on the method used... easy to see why debit card payment is slowly becoming a thing of the past).

@errolthecat is absolutely right to identify that their credit card usage is unlikely to be profitable for their issuers.

End of the day, card issuers wouldn't give people like me credit cards if they didn't make money/were losing money, yet they do. This post is simply incorrect e.g. the idea that they issue a card every year (wrong - most are issued with 3-4 years validity), or that they pay £1 a time for posting and printing the card paperwork (a one off cost, most of it comes with the card that you have double accounted for in your £5 and £1). 

They know that if they issue enough cards to people like you then eventually enough of them generate enough profit one way or another to make the whole operation viable. It's not unusual in finance; unless you think every insurance policy is profitable or every fee-free current account created yields a profit.

I never said they issue a card every year (although sometimes they do, actually, each of my last 3 Natwest Reward credit cards have had only 1 year of validity for whatever reason). I never said that they only issue 1 either, that'd be an invalid assumption because most encourage additional cardholders.

I also never said card setup paperwork, you're saying that. Could be anything (other than the card). Perhaps for some cards this is zero, but the amount of people who still get paper statements for example is bigger than you might imagine - that's £12/year.

These are just examples of sunk costs across their lending book they need to recoup somewhere to be profitable. But if you want to take a cost which is elastic with spend - try and figure out the cost of providing that interest free period, using the base rate at 5%. That's 'free money' to the consumer but certainly not to the bank.

jayef

Phoenix72 said:

jayef said:

My statement date has moved to the 31st of the month (silly date!). My payment due date is  now the 15th of the month. That is NOT 21 days is it??? Or am i misunderstanding something. 

Those dates have each been moved by 6 days so basically it was only 15 days (and illegal?) before?

What do you mean by 'due date'? The date the DD will be taken or the last date payment must be received by?

The payment due date is the date that the payment is due! This used to be the same date that the DD was taken. But now the DD date is 5 days earlier than the due date. Apparently so that "you'll have time to pay manually if your DD fails". Call me a cynic but I think it's so they can get my money 5 days earlier!

Phoenix72

jayef said:

Phoenix72 said:

jayef said:

My statement date has moved to the 31st of the month (silly date!). My payment due date is  now the 15th of the month. That is NOT 21 days is it??? Or am i misunderstanding something. 

Those dates have each been moved by 6 days so basically it was only 15 days (and illegal?) before?

What do you mean by 'due date'? The date the DD will be taken or the last date payment must be received by?

The payment due date is the date that the payment is due! This used to be the same date that the DD was taken. But now the DD date is 5 days earlier than the due date. Apparently so that "you'll have time to pay manually if your DD fails". Call me a cynic but I think it's so they can get my money 5 days earlier!

Don't pay by DD then if it's an issue.