Watch out for credit card companies playing tricks.
We name and shame Lloyds TSB and MBNA for their latest ploys to make money at your expense. And they are not the only companies in the dock.
The trouble is that the banks and card companies like to have it all their own way – all the time. This means that whenever the consumer wins a victory and saves himself some money, the banks respond by getting sneaky and clawing their cash back. The price of cheap credit is eternal vigilance.
See our independent credit card best buy tablesLloyds TSB want your balance transfer… and an annual feeThe award for the sneakiest trick has to go to Lloyds TSB. They offer a 0% for nine months balance transfer deal, but, and here’s the kicker, in order to qualify for the low rate you must spend £100 on the card.
Of course, your £100 of new purchases will attract interest at the full APR of up to 17.9%. And, because of the way repayments are applied, you won’t start paying off any of that £100 until you have paid off your entire balance transfer.
Over the course of the nine month interest-free period for your balance transfer your £100 spend will grow by about £13.50 (at 17.9%). This is a reintroduction of an annual fee for holding a credit card by the back door -
I’ve written about this before. The advantage to Lloyds of doing it this way is that it avoids making their balance transfer offer look less attractive, unless you are on the ball.
See our independent balance transfer best buy tableNot a big spender? Lloyds TSB will charge you a feeNot content with forcing consumers taking advantage of their balance transfer offer to pay a back-door annual fee (on top of paying the 3% balance transfer fee), Lloyds are making their lowest spending card customers pay an actual annual fee.
Around 50,000 low-spending Lloyds TSB customers will now be charged a £35 annual fee for holding their cards. This is likely to be just the start.
If you are a Lloyds customer and you’ve been caught by this rule then switch providers to one of our
low rate alternatives. But, be aware that offer firms may follow suit.
MBNA have an inventive sneaky tricks departmentThe award for barefaced cheek goes to MBNA. From March 30th, customers who end up in credit on their cards for twelve months or more will have to pay a fee of £10. If your credit balance is below £10 then MBNA will simply keep your cash.
A spokesman for the company described the introduction of the fee as nothing more than a “tidying up exercise”. A tidy little profit they’ll be making I shouldn’t wonder.
Still, in fairness to MBNA they do offer the following options - transfer the credit balance to their current account, spend the credit balance on their credit card, or donate the credit balance to MBNA’s "nominated charity", which is currently Cancer Research UK.
Check out our new purchases best buy tableA general tightening of terms and conditionsA slew of credit card companies have tweaked various aspects of their rates, charges and fee structures in response to the recent OFT ruling that exposed their penalty charges as illegal and excessive.
The standard APRs charged have crept up in many cases, with 14.9% becoming 15.9% in many cases. Interest rates on cash withdrawals (always an expensive mistake to make) have soared by as much as 10% in some cases. And, balance transfer fees of 2.5% and 3% are now the norm for cards with the strongest introductory rates.
The moral of the story shop around for credit cards but pay closer attention to the small print or you could get stung.
See our independent credit card best buy tables
