Credit card companies find a new way to increase revenue

A number of credit card companies in the UK have apparently found a new way to increase their revenue according to recent reports, and this is through charging higher interest rates to many consumers even though they do not have a bad credit rating.

This is because a number of credit card companies are now targeting those that they consider to be at risk of struggling with repayments in the future, and this has outraged many consumers who have never made late repayments or missed payments.

According to reports credit card companies are now looking at consumers with high debt levels or with a number of credit cards, and placing them in the high risk group. Those that always make minimum repayments, even when this is done on time every month, are also being classed as higher risk. As a result of this these customers have suddenly been high with vastly increased interest rates.

• Credit Card Options For People With Bad Credit
  There are many items that you can only pay for with a credit card. If you want to book a holiday on the Internet, a credit card is a secure way to pay. And if you want to hire a car when you get to your destination, a credit card is your only option.

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.'

One woman was outraged to find that her interest rate had shot up on her MBNA credit card. She stated that although she only made the minimum repayment she had a direct debit set up so repayments were always on time and never missed. Another elderly woman was shocked to see her interest double despite always making repayments on time and for at least the amounts requested.

Tom Smith
3rd November 2007

Recent additions:

• Using your plastic online [01.11.07]
• Collapse of a credit union [29.10.07]
• Increase in plastic card fraud [26.10.07]
• Customers with good credit being targeted by lenders [26.10.07]
• Consumers turning to credit cards to pay their mortgage [25.10.07]
• Rewards based credit cards [21.10.07]