Customers with good credit being targeted by lenders : Credit Card Guide

Customers with good credit being targeted by lenders

It is a known fact that anyone that has a damaged credit history and low credit rating is likely to be lumbered with crippling interest rates if and when they decide to take out any form of finance.

However, a recent report has highlighted how, in light of the turmoil that has hit the financial sectors in the UK, many lenders are now dramatically increasing interest rates on many customers with good credit, often doubling the interest rate charged on finance such as credit cards.

The reports suggests that lenders are looking at the accounts of customers that have good credit but are at risk of struggling over time. This includes those that have a number of credit cards or debts, and those that only make minimum repayments on their debts, even if the repayments are always on time. Many customers that have seen their interest rates shoot up have expressed anger at what many lenders are doing.

One elderly woman explained that she discovered that MBNA had pushed up the interest rate on her credit card from 15.9% to 27.9% recently. She phoned the bank but they refused to cut the interest rate. The customer stated: 'This doubled interest, coming at the same time as my husband died, is most distressing.'

Another customer who saw her credit card rates double stated: 'I pay the minimum by direct debit every month, so I can't miss a payment. I can't understand it. It is so unfair.'

One industry professional stated: 'Lenders are already digging deeper to pick up on early signs of over-indebtedness. Credit cards provide early warning signs such as borrowing from one card to pay another or constantly making only minimum payments. This kind of information will have a bigger impact than it would have done in the past.'

Tom Smith
26th October 2007

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