Credit cards tempt customers with 0% deals they can't get? Surely not.

3 June 2011

credit cardsThose 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...

TOPICS:   Investments   Credit Cards


  • Dick
    Interest rates don't bother me too much, since I pay off my bill every month. Cashback rates do bother me though, although I have never been rejected for one. If I didn't pay off the card every month, and if they did reject me at a low interest rate but offered me a higher rate I would probably get them to set the account up, send the card and activate it. And then I would cancel it. Then apply again. Just to piss them off.
  • Dick
    As to spending, nearly everything I spend is on a credit card. I love getting the card out for a pint of milk.
  • Dick
    What does the * refer to in "making money*" ?
  • Mad H.
    "as we reported last month"... Yes, and it was five months old then. On a more technical note, the 51% figure is the percentage of customers who must receive an offer's headline APR, which doesn't take introductory 0% rates into account in any way

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