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With the credit crunch taking hold - there has inevitably been talk of credit card providers tightening their lending criteria. Credit card companies seem to be more reluctant to loan people money, and requirements have become more stringent according to Peter Harrison, Head of Cards and Payments at Moneysupermarket.com
At the same time interest rates have also risen, with APACS reporting that the average interest rate has risen from 17.2% to 17.6% in the same time that the Bank of England reduced rates from 5% to 3%.
E4S (www.e4s.co.uk) has carried out research and questioned 195 people on their credit card use, and has found that although other sources suggest lending criteria may well have become more stringent, the results from the survey do not reflect this. Although 97% of respondents have claimed they are students, only 10% have been refused a credit card. The suggestion that 90% of respondents, of whom the vast majority are students, have been accepted for credit cards is at odds with the comments by Peter Harrison. Looking back over the past year however, one in 10 credit card providers has withdrawn a 0% interest deal. These promotional deals – such as 0% interest on balance transfers, when they were first introduced, didn’t incur any other charges. Generally speaking most credit card deals with balance transfer promotions now come with an approximately 3% fee of the total transferred. If you are looking to get the best balance transfer deals, visit the credit card comparison page for the latest information and deals.
Irrespective of how the lending criteria of credit card providers has changed, Lord Mandelson has stated that he "will have no hesitation, if these companies don't step into line and start treating people in a fair, responsible, consistent way, then I will ask the Office of Fair Trading to look into their practices, report to me and then I will be able to take even further action." This is particularly in relation to interest rates, but with some credit card being accused of exploiting vulnerable households, credit card companies are seemingly being scrutinised ever more closely.
This will come as welcome news to many credit card holders - who are facing increasing credit card costs and worse credit card deals on the market, even though in these tough economic times many people may well be relying on them more heavily than ever. www.e4s.co.uk provides reviews on the best deals for students - including a comparison of credit card deals, and student credit cards.
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