Credit cards tempt customers with 0% deals they can't get? Surely not.
Those credit card companies are slippery sorts. So intent are they on making money* that they have even turned EU changes to their advantage. As we reported last month, some new regulations have been implemented that are very definitely Good Things - things like making sure the most expensive debt is paid off first and the end of unrequested credit card 'cheques'. However, there was another teeny little change to the regulations, that is allowing the credit card companies to be, well, a little misleading. Surely not.
You see, previously, card companies were only permitted to advertise deals that were available to two thirds of applicants. Now that level has dropped to just 51%, meaning we are bombarded with amazing deals, that we may have no chance of getting.
The law was intended to harmonise consumer credit laws across the EU, creating one market for retail financial services where consumers could shop around for the best deals outside their own country, but the British Bankers’ Association predicted in 2007 that as many as 1.7m consumers would be unable to access credit or would find that the amount they could borrow would be limited if the directive was introduced.
The UK Cards Association said the impact of the directive had been “limited” and that the UK credit card market continued to be highly competitive, despite the fact that interest rates on credit cards are at the highest level for 13 years. This would be at the exact same time as base rates have been consistently low, right? Golly.
But are the high rates putting people off using credit cards to buy stuff online? Recent research by Sainsbury's Finance found that the most enthusiastic online shoppers are those aged 35-44 years old, who typically spend an average of £215 each month which is above the British average of £192. However, these averages are misleading as in actual fact two-thirds of people spend less than £100 a month on their cards, but there are an estimated 1.2million credit card-holders who spend more than £1000 a month online, significantly increasing the average for the country as a whole.
So have you been unable to get the advertised rate? Do you spend more than £1000 a month on online purchases on your credit card? Surely not...