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Barclaycard Put The Squeeze On Credit

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What does a 0.25% interest rate cut matter when 9 million people face a 2% increase on their credit card debt and no doubt more companies will follow.

Some could face interest rate charges of as much as 27.9% depending on their circumstances, is this the start of the credit crunch :o

27.9% thats almost loan shark territory

Guardian Today - Barclaycard raises interest rates 2%

Barclaycard's 9 million customers face sharp rises in their interest charges because the credit card company has decided they are becoming less likely to pay back their debts.

Britain's largest and oldest credit card business is increasing its rate of interest by as much as two percentage points, even though the Bank of England's official rate is falling. The official base rate was cut from 4.75% to 4.5% in August.

Barclaycard has made the decision to implement the rate rise at a time when the credit card industry is under close scrutiny by the Office of Fair Trading. The OFT has ruled that the card providers should cut the default charges levied on customers who fail to pay on time, exceed their agreed credit limit or pay with a cheque that bounces. These charges can be as much as £25 a time.

Barclaycard has not formally announced the rate increase but is gradually writing to its customers to inform them of the rise, which will take effect from November.

Part of Barclays Bank, the company does not set the same rate for each of its customers because it decides how much to charge them depending on their ability to repay their loan. The company said the majority of its customers would now be charged either 14.9%, 17.9% or 19.9%, although some could face interest rate charges of as much as 27.9%, depending on their circumstances....................

EDIT - This is the bit that really gets me, no doubt Brown will be taking the same moral high ground in a few months time :angry:

Barclaycard has been positioning itself as a responsible lender at a time when there is concern about consumers running up unaffordable debts on multiple credit cards
Edited by Riser

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Drug dealer heads off to school to sell some smack.

Finds little Johnny,"Hey Johnny, you can have an eighth for 10 quid"

Little Johnny,"Cool, but I've only got a fiver"

Drug dealer, "That's ok, tell you what, I'll lend you the other 5"

At what point does the drug dealer start stop lending money to little Johnny?

I'd say at about the time he knows that little Johnny can't live without it.

Edited by BandWagon

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Barclaycard's 9 million customers face sharp rises in their interest charges because the credit card company has decided they are becoming less likely to pay back their debts.

So put up the interest rates to make it more likely that people will pay back their debts??

Nope, yet again another big institution screwing the people who live their lives in moderation to allow for the morons who max themselves out.

Glad to be British. :angry:

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So put up the interest rates to make it more likely that people will pay back their debts??

Nope, yet again another big institution screwing the people who live their lives in moderation to allow for the morons who max themselves out.

Glad to be British. :angry:

This is a classic sign of a recession ahead, BOE rates falling but credit costs rising, the banks want their money back fast before the dam breaks.

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So put up the interest rates to make it more likely that people will pay back their debts??

Nope, yet again another big institution screwing the people who live their lives in moderation to allow for the morons who max themselves out.

Glad to be British. :angry:

This isn't jsut British, it's just standard risk management strategy.

As the probability of default on debt increases, the value of that debt suffers.

Lenders demand higher rates of return to compensate.

Sadly this has the effect of hitting those who can't afford it the worst.

Hence defaults start to rise, and rates continue to rise.

Welcome to the credit crunch.

As the saying goes, a bank is an organisation that will only lend you an umbrella when it isn't raining.

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Good thread this.

Barclays know a lot are gonna default in the coming months, and that cc spending will plumet as people see there house value do the same and have worked out by how much so have also worked out hiking up the rate by 2% will cover what they miss out on. In fact cc spending has already dropped drastically.

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Can anyone confirm if this happened last time? I know that credit cards weren't as common back then but what about other "easy" forms of credit such as unsecured personal loans, loans from finance companies etc?

I'm thinking that this could be the start of a very important trend. Banks starting to get worried and if you add this to the situation in the USA with credit card repayments being effectively doubled by government regulation then it seems that worldwide there is a movement for the banks to take their money back either by force (USA) or by penalising those with unsecured debts (this example).

The flat refusal to comment on rates from the RBA Governor on Oz is still ticking over in my mind too...

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"Barclaycard's 9 million customers face sharp rises in their interest charges because the credit card company has decided they are becoming less likely to pay back their debts."

If they put interest rates up doesn't the amount you have to pay each month go up? And thus it becomes a self-fullfilling propehsy that you won't be able to afford to pay it back?

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This isn't jsut British, it's just standard risk management strategy.

As the probability of default on debt increases, the value of that debt suffers.

Lenders demand higher rates of return to compensate.

Sadly this has the effect of hitting those who can't afford it the worst.

Hence defaults start to rise, and rates continue to rise.

Welcome to the credit crunch.

As the saying goes, a bank is an organisation that will only lend you an umbrella when it isn't raining.

Fully agree. The thing that annoys me is that the banks get away with this. Someone's going to pay the money back....they just don't care who it is. Whether it's the person with a few hundred quid on their card, or the one with 10 cards and 10 grand on each who's going to default, seems to be immaterial to them.

Their ability to do this is probably why there's so much debt in this country. The overall effect is that everybody loses.....apart from the bank that is.

(Edited due to inability to spell or punctuate correctly)

Edited by FreeFall

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I dumped both Barclaycard and Barclays Bank some time ago now, and glad I did.

Same here. In fact the only other company I have had such poor service from is Ryanair - at least they have the excuse of cheap flights.

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I dumped both Barclaycard and Barclays Bank some time ago now, and glad I did.

Me too, dumped them in Jan, Ba$tards charge me £20 for a 1 day late payment on a balance of £35.

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"Barclaycard's 9 million customers face sharp rises in their interest charges because the credit card company has decided they are becoming less likely to pay back their debts."

If they put interest rates up doesn't the amount you have to pay each month go up? And thus it becomes a self-fullfilling propehsy that you won't be able to afford to pay it back?

Yes. The virtuous circle now becomes a vicious circle. In so many ways. The housing market being but one part of this.

Edited by Starcrossed

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The real problems will start when the credit card companies stop the 0% credit charge deals, take the offers off the market and then charge the earth for credit. It's the classic elephant trap....they want you to borrow as much as you can/dare 'for free' then remove the 0% facility and hike the rates.

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Barclays the smoke and mirrors crew run by an Irish/Canadian gangster who sniggered and told the Parliamentary committee investigating his outfits charges that only suckers use Barclaycard.

You ain't seen nothing yet, just wait till the MBNA gang get hungry and kick off, just Google 'MBNA COMPLAINTS' and see the number of complaint sites about how this Illinois based outfit is shafting the mugs in the States, every concievable type of complaint anf allegation of fraud you can imagine, doubling interest rates without warning, loan sharking, even jacking their loan interest rates up to as high as 59% on late payers etc, the boys from MBNA Chester who also had a roasting from the Parliamentary Committee investigation will be galloping full pelt past Barclaycard in their masks and striped Jersy's.

Edited by Serpico

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Guest Charlie The Tramp
Fully agree. The thing that annoys me is that the banks get away with this. Someone's going to pay the money back....they just don't care who it is. Whether it's the person with a few hundred quid on their card, or the one with 10 cards and 10 grand on each who's going to default, seems to be immaterial to them.

Welcome to the true Banking World, hell hath no fury as a lender about to get knocked.

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The word on the 'UKs only momey saving expert forum' is tha MBNA are about to shaft their cardholders for a £15 annual fee.. Mmmmmmmmm wonder how many 15 quids that is, looks like the bosses are worried about their annual bonus.

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Me too, dumped them in Jan, Ba$tards charge me £20 for a 1 day late payment on a balance of £35.

My first ever bank account was with them, they shut down my account (dunno why, maybe because I was on a YTS and getting paid peanuts? I'd never gone overdrawn or anything. *shrugs*). They then charged me for the privelage, taking me overdrawn. Ba$tards!

With First Direct now, lovely people.

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The word on the 'UKs only momey saving expert forum' is tha MBNA are about to shaft their cardholders for a £15 annual fee.. Mmmmmmmmm wonder how many 15 quids that is, looks like the bosses are worried about their annual bonus.

They will lose out to the competition if they do. If others follow, then it will be likes of Tesco that offer a fee free card. They will take over any area where profits are fat, cut them back and still make loads.

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i'VE JUST MOVED A CHUNK OF CASH TO THEIR ON-LINE ACCOUNT. Not bad IR, comaratively.

I was going to set up a First Direct account, but then I noticed the small print: apparently if you take money out you get no interest at all for that month. Good if you want to keep money there a long time, but even one transfer of money a year and you're probably getting a lower rate than elsewhere.

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I was going to set up a First Direct account, but then I noticed the small print: apparently if you take money out you get no interest at all for that month. Good if you want to keep money there a long time, but even one transfer of money a year and you're probably getting a lower rate than elsewhere.

Yes, that is right. I will use it as the "tail end" of my saving portfolio!

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I have an FD savings account, what I do is keep the bulk of my growing deposit there. But I still have the ING account open too, so basically use this as my rainy day account.

Haven't bought shares for a while, woundn't mind dabbling again.

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