Mega Credit Cards

The Competition Commission one of the governments watchdogs, has at last moved to shame credit cards in to cutting their charges. The long overdue move comes after the Commission concluded that the credit card industry was overcharging customers between 55 and 100 million each year through excessive interest rates and other charges. And this has been going on for a least 3 years!

The main culprits by far are store cards where interest rates are as high as 30.9% – even though the Bank of England’s base rate stands at just 4.5%. The worst culprits were TJ Hughes and the Faith Card followed by Owen & Owen. You can find them heading the Table of Shame shown below in this article.

The commission has also come down on high penalty charges for missed or late payments and Payment Protection Insurance. Average penalty charges are currently 15 per event but the Commission is also right to argue that these charges are excessive.

As for Payment Protection Insurance, the Commission has joined the consumer body Which, the National Consumer Council and indeed the Financial Services Authority in concluding that whilst this insurance can be a good idea, credit card operators have abused it. The Commission has therefore decreed that Payment Protection Insurance must no longer be sold in a combined package with a credit card; it must always be purchased as a separate stand alone transaction. That’ll be good news for the Internet where many of the cheapest Payment Protection Insurance deals can be found. With premium savings of up to 60% in comparison with credit card and loan packed arrangements, business on the Internet will flourish.

So what do the new rules from the Competition Commission say? The five main changes are:

If a credit card charges more than 25% interest, it must carry a prominent warning that there are cheaper ways to borrow. This warnings must be displayed on every monthly statement.

The interest rate and penalty charges must me clearly displayed on the front page of each monthly statement.

The monthly statement must warn of the consequences in terms of higher interest charges, of just paying the minimum monthly repayment.

Credit Cards must offer every customer the option of automatically clearing their monthly balance each month by direct debit. These direct debits would avoid any possibility of interest charges and late payment penalties.

Credit Card operators must not sell Payment Protection Insurance in a combined package with credit cards. The insurance must be sold as a separate and optional transaction that enable purchasers to see the true cost.

These new rules seem destined to shame retailers into slashing their charges that’s not to say that 25% pa interest is a snip! Main line credit cards issued by banks are currently charging around 14% to 18% and we think that’s too high!

Indeed, between 80% and 90% of store cards held by some 11.5 million customers charge more than 25%. But some retailers have jumped the gun realising that their sky-high charges couldn’t last forever. Three store cards have already taken steps to trim back. Harvey Nichols has cut their interest from 28.5% to 21.9%, River Island has trimmed down from 29.9% to17.9% and Monsoon from 29.9% to 18.9%.

But who are the bad boys? Here is our Table of Shame:

TJ Hughes 30.9%
Faith Card 30.9%
Owen & Owen 30.7%
Burtons 29.9%
Dorothy Perkins 29.9%
East 29.9%
Evans 29.9%
HMV 29.9%
JD Sports 29.9%
Kwik Fit 29.9%
La Senza 29.9%
Laura Ashley 29.9%
Miss Selfridge 29.9%
Russell & Bromley 29.9%
Ted baker 29.9%
TopshopTopmam 29.9%
Wallis 29.9%
Warehouse 29.9%
House of Frazer 29.3%
Bhs Gold Card 29.0%
Habitat 29.0%
Oasis 29.0%
Harrods 28.9%
Fenwicks 27.9%
Selfridges 27.6%
Bentalls 27.2%
Jaeger 27.1%
B&Q 26.8%
French Connection 26.8%
Argos 25.9%
Homebase 25.9%
New Look 25.9%

Note: Some of these cards do offer lower interest rates for payment by Direct Debits. Source: Competition CommissionMoneyfacts March 2006

These credit cards are operated by a number of large finance companies, the largest being GE Capital the American giant. The profits are shared between the card operator and the retailer who is often incentivised by being awarded a higher share of the profit if they hit certain key debt thresholds. This has encouraged stores to put immense pressure on shoppers to take cards out.

The Chairman of the House of Commons Treasury Committee, John McFall has accused retailers of putting profit before customers saying If you buy a suit from one of the stores then you would expect the retailer to ensure that it was well made and reasonably priced. These principles do not seem to apply to their store cards.

Lets all hope that the action taken by the Competition Committee does the trick!

Credit Cards for people with very bad credit are no longer a myth. Mostly fueled by over spending, bad credit is rising across the nation. A recent survey showed that nearly 1 out of every 7 Americans has a below 600 credit score indicating an adverse credit rating. Notwithstanding this position, there is always a demand for credit to manage financial exigencies. To cash in on this , credit card companies are offering bad credit – credit cards with higher interest rates, membership and set-up fees. This is a gift of the demand- prevailing in the market. While you get the advantage of still having a credit card, the company utilizes the opportunity to do brisk business.

To repair your bad credit score, bad credit – credit cards offer an excellent opportunity. With a lower credit limit, you have a restriction on purchases. Now, if you can develop a habit of spending on a budget and keep capital for payments, you can maintain a healthy credit card account. This consistently improves your credit rating. Once you make the grade, you can access a wide selection of value-added credit products and services. You also become eligible for a regular credit card with no annual and set-up fees. Credit Cards for people with very bad credit which was unthinkable some years back is now a great resource for getting credit on dire necessity and use it responsibly to rebuild your poor credit profile.

Before receiving Credit cards for people with very bad credit, its always better to visit the local credit union or do some research on the web to find the best offers. These cards charge higher interest than regular credit cards. If you are able to provide some collateral security like a bank deposit that can be accessed should you default in card payment or have someone guarantee your application, you may be able to bargain the interest rate to get it down to a more comfortable amount. If you have a stable income and a permanent residence, you are a preferred customer for the credit card companies. If your bad credit is due to some unforeseen circumstances like a medical emergency or loss of livelihood, you can better negotiate your credit card terms with the companies. Bad credit – credit cards offer some convenient flexibility linked to your credit background and future standing. Bad credit is not always the end of the world, the credit card is there to help you out.

The credit card industry is a competitive one; all you have to do to see that is open your mailbox. For many consumers, pre-approved credit card applications can be found every week in the mail, often accompanied by offers to let you transfer an existing balance from another credit card at a low interest rate. Sometimes these rates, known as “teaser” rates, can run as low as 0%, which can make applying for one of these cards rather tempting. Be careful, though. The fine print in the terms of agreement on those cards could hide some very expensive surprises.

Here are some things to watch out for in the fine print when you apply for a card with a low-interest introductory offer:

Default rate – How high can the interest rate go if you fail to make a payment on time? This is known as the “default rate.” If you pay late, your 0% or 3% interest rate could rise to 30%. Make sure you know.

Duration of the low rate – How long does this “teaser” rate apply? Six months? Until you pay off the transferred balance? Make sure you find out, as these rates often rise to the regular rate that applies to the card after some limited period of time.

Other debts – Does this card agreement have a universal default clause? Many credit card companies will now raise your interest rate if you make a late payment on any bill, such as a telephone bill. Credit card companies claim that paying any bill late makes you a higher risk customer. You don’t want your interest rate to rise because you forgot to pay the cable TV bill, so read your terms carefully.

Other charges – These “teaser” rates apply only to transferred balances; they do not apply to new charges. If you use the card to make purchases, those purchases will accrue interest at a higher rate. When you make payments, the payments will be applied to the portion of the balance with the lowest rate first, meaning that these purchases could be accruing interest at the higher rate until you pay off your balance completely.

Any reason, or none – Most card agreements permit the company to raise your interest rate at any time, for any reason. All that is required is two weeks’ notice. Keep this in mind if you are transferring a large balance that may take you several years to pay off. Sometimes, “until you pay off the transferred balance ” only means until someone at the corporate office changes their mind.

As long as you are aware of the terms, these teaser rates can be quite helpful. If you pay late or fail to read the fine print, you could find yourself paying a lot more in interest. Read the agreement before you apply for the card.

If you have ever wondered what people mean when they talk about best credit card details then you may be surprised to learn that you are not alone. Many people are unaware of the complexities of credit card details!

Basically if you are looking for a credit card, then it is likely that you have a credit card, so you may be looking for a credit card balance transfer and you will want to get the lowest rate of interest possible. If you do not have a credit card and are applying for your first one, then you will only be interested in securing the lowest rate of interest.

Now, here is where the best credit card details comes in! When you see advertisements for credit cards, they will often offer you a 0% fee balance transfer, or you will be offered a low interest charge.

But you need to check the details! Many companies will offer you a 0% interest rate on any balance transfer. All well and good. But then if you use your credit card again interest will be accrued until you have paid off the balance that is outstanding. So you can end up in a situation where you are little better off.

Plus many credit card companies may offer you a teaser in the sense of a period where you pay very low interest rates. But check out what the interest rates will be after this period has ended: you could end up paying more than you originally were paying or thought you would be paying.

Ultimately you will not be able to get the best deal or the best rate from a credit card provider unless you are willing to do some research and check out the details of the deal that is being offered to you. And perhaps it is worth remembering the old saying; if something seems too good to be true, then it very probably is indeed too good to be true!