Finance Matters

Posts Tagged ‘Credit Card News’

A court ruling writing off a consumer’s £5,126 store-card debt has opened the door for similar cases according to a report by the BBC.

Judge Henrietta Manners ruled at Clerkenwell and Shoreditch county court that Santander must write-off the debt on a credit card held by Diana Mayhew.

Ms Mayhew’s store card was automatically upgraded to a credit card by Santander in 2003.

However the bank failed to supply the terms and condition for the new card, which was issued by GE Capital which ran the Harrods store card business.

Ms Mayhew argued that she had no asked for the card to be upgraded.

“If you send someone a card marked ‘Harrods, go spend’, the temptation is massive to use it,” she said.

Although Santander claimed that GE Capital did not need to send out new terms and conditions when the card was upgraded, the judge said that this information was required under consumer credit regulations.

As the bank had failed to adhere to these regulations it is not legally allowed to recover the debt.

The case could lead to other defaulting card users arguing that their debts are unenforceable if their card has not been upgraded properly.

Meanwhile, new rules have been introduced for store cards as part of changes agreed by the government and the credit card industry.

Shop staff can no longer be paid a commission when they sign up a new customer, and incentives or discounts cannot be offered until seven days after the date the card is taken out.

This means that stores can no longer offer a discount on goods in return for customers taking out a store card.

The new rules also make it an obligation for stores to train their staff about store cards.

Consumers are used to receiving a monthly credit card statement, either online or by post but from today they will receive an annual statement as well.

The initiative has been launched by the UK Cards Association and the Department for Business, Innovation and Skills, as part of the credit card industry’s efforts to be more transparent about charges.

The statements will give consumers a clearer picture of their credit card spending over a year and are designed to counter criticism over the information provided by credit card companies.

Credit card holders will receive the new statements on the anniversary of when their card was issued.

All statements will provide the same information, regardless of which provider issued the card, including point-of-sale transactions, cash advances, balance transfers, along with any fees, interest charges and other costs.

Melanie Johnson, Chair of The UK Cards Association says: “Annual credit card statements will help empower customers by giving a clear view of how they’ve each managed their plastic over the past year.

“By clearly setting out costs and charges, this industry initiative could help customers get a better deal, either by being more savvy about how they use their current card, or by changing to another account that’s a better fit.”

Price comparison site MoneySupermarket.com is also calling on credit card holders to check if they could benefit by switching cards.

In a survey of its users, the site found that 40 per cent looked for a good balance transfer offer when choosing a new card, while 23 per cent looked for a long zero per cent period on new purchases.

Only seven per cent said that a competitive APR was the most important factor.

Kevin Mountford, head of banking at MoneySupermarket.com said: “Understanding how you spend on your card gives you the perfect opportunity to switch to a card that suits your needs, so you can make the most of your finances and ensure you’re not paying over the odds.”

An investigation by Channel 4 has found that Barclays’ contactless credit and debit cards, which are used by up to 13 million customers, are at risk of fraud.

In collaboration with mobile phone security company ViaForensics, Channel 4 discovered that smartphones integrated with near field communication (NFC) technology can steal data from the cards with just one swipe.

Details such as card number, expiry date and name can be stolen by brushing a smartphone past a wallet containing a contactless card.

In a statement Barclays said: “We are compliant with scheme rules for contactless cards and our fraud guarantee refunds any fraudulent losses to customers in full.

“The only information which can be obtained from a chip is the same as that which is printed on the front of the card – this does not include secure information such as PIN or signature (CVV) code.”

However, purchases can be made from online retailers such as Amazon without a PIN or three-digit security verification codes.

In related news an undercover investigation by The Sunday Times discovered that Indian call centres are selling credit card details and medical records of Britons for as little as 2p.

The information is being sold to marketing firms and criminals the investigation found.

Reporters from The Sunday Times met IT workers from call centres in India, who claimed to have 45 different sets of personal information on around 500,000 Britons.

The data included credit card information from major UK banks including customer names, addresses, and phone numbers, as well as card numbers, start and expiry dates, and three-digit security verification codes.

Other data being sold included information about mortgages, loans and insurance, which could be used by marketing companies to target customers.

It is estimated that around 330,000 people are employed in call centres in India.

Personal loan, credit card and overdraft borrowing is being repaid at the highest rate since January 2011.

The British Bankers’ Association (BBA) reported net consumer credit repayments of £305 million in February.

Consumers borrowed £7 billion on credit cards but £7.3 billion was repaid.

The ongoing squeeze on household incomes is making consumers more careful with their spending with a net repayment in debt being made for six out of the past seven months.

The BBA also reported that the number of mortgage approvals fell to 33,103 in February from 38,000 in January when it was at the highest level for two years.

The decline was attributed to a drop in the number of first-time buyers trying to purchase a property before the end of the stamp duty holiday on properties under £250,000.

BBA statistics director David Dooks said: “Businesses and households continue to be cautious about their finances in the face of difficult economic times and this shows up in a reluctance to take on new credit, or where possible, seeking to pay back bank borrowing.”

In related news comparethemarket.com has calculated that UK consumers are paying £6.5 billion a year in credit card interest.

The comparison site based its calculations on March 2012 official UK Debt Statistics.

The average interest rate on credit card lending is 18 per cent, while the Bank of England base rate is just 0.5 per cent.

Comparethemarket.com is advising consumers to compare deals in order to find the best interest rates.

Simon McCulloch, Director of Money at comparethemarket.com, said, “The cost of servicing credit card debt can really add up.”

“Credit card debts attract interest due to people not paying off the full total each month. This is why it’s worth looking around to find a good deal on interest rates.”

Lloyds TSB has refunded the £3,700 cost of a woman’s breast implants after they ruptured.

The woman, who is in her 40s and lives in the Midlands, had the implants in 2008 at a private firm which later went into administration. .

She consulted a breast cancer clinic in September 2011 after she found a lump, and was told by the clinic that the implants had ruptured.

After discovering that the implants could pose a health risk, she had them removed by the NHS in October.

As she had paid for the implants with a credit card the woman applied to Lloyds TSB for a refund and received the full amount three months later after filling in just one form.

Her implants had been manufactured by the French company Poly Implant Prothese (PIP) which was at the centre of a scandal after it was found to have used industrial grade silicon in its products.

The inferior grade silicon, which was meant to be used in mattresses, had not passed safety tests for use in the human body.

Implants containing the silicon were found to be greater risk of rupturing and causing pain.

Around 40,000 women in the UK have had PIP breast implants and many private clinics are refusing to replace them free of charge.

The British Association of Aesthetic Plastic Surgeons (BAAPS) said Lloyds TSB’s action in refunding the cost of the faulty implants offers a “ray of hope” to other patients.

Credit card firms are required to refund the cost of faulty goods under Section 75 of the Consumer Credit Act.

Under the law, when a purchase has been made with a credit card, the card provider is liable, along with the retailer, for a breach of contract, such as occurs when goods are sold which are not fit for purpose.