Another victory for Nationwide
In a recent poll of the most trusted banks and building societies the Nationwide Building Society pipped all of the major banks to the post, securing the number one spot as most trusted bank or building society.
The only building society to even feature in the top ten in the poll the Nationwide managed to fend off competition from the major banks including Barclays, Lloyds TSB, and HSBC, with consumers stating that they were particularly happy with the services provided by the building society.
It seems that the Nationwide has now reigned victorious once again, after being recognised as the best credit card provider at a recent awards ceremony.
The building society received the recognition at the Card Awards, and was praised for being transparent about charges and terms, as well as for the positive way in which borrowers’ repayments are allocated. The building society claims that its credit card customers save around £2.1 million a year collectively as a result of the allocation of payments.
Campaigners and the Office of Fair Trading have stated that credit card providers need to be cleared and more transparent when it comes to charges, as many consumers are getting confused and credit card companies are through to be netting around £400 million a year in extra revenue because of this confusion.
Card companies have also been slated for allocating monthly repayments to lower interest balances first and leaving higher interest balances to continue accruing interest.
An official from the Nationwide Building Society stated: “We understand how difficult it can be for consumers to make the right card choice. This is why it is important that the information is presented to customers clearly to help them choose the card that best suits them.”
Credit card providers confusing customers and making more money
Credit card providers in the UK have been accused of confusing customers with technical financial jargon and making millions of pounds in extra profits as a result of this.
The Office of Fair Trading has stated that credit card companies are pulling in an extra £400 million a year as the result of consumers paying more than they should after getting confused with the jargon that card companies use in their small print.
The Office of Fair Trading is now putting into place a process that should stop consumers from getting confused and paying over the odds for their credit cards.
A number of steps are being taken by the watchdog to try and eliminate this problem. One of these steps is to make credit card companies use a summary box on marketing materials and statements using simple, easy to understand language that summarises the terms and conditions of the card.
The watchdog is also looking to place a ban on credit card companies using technical jargon in the small print, which is often skipped or misunderstood by consumers.
The OFT is also planning to set up a website that will allow consumers to compare credit cards that offer the best value for money based on their needs, circumstances, and repayment habits.
Officials from the OFY stated: ‘Providers can add to the problem knowing that consumers cannot process complex information. They can create “noise” by increasing the quantity and complexity of information which makes it difficult for consumers to see the real price.’
Many consumers do not spend time shopping around for the best card deals, and the OFT stated: ‘Most consumers are not choosing effectively between credit card products. If consumers did shop around for a card, they could make substantial savings.’
Egg’s actions could benefit some consumers
Consumers with damaged credit who have had their credit card accounts closed by Egg may actually benefit in terms of seeing their credit improve according to officials from the credit reference agencies.
Officials also added that nobody affected by the card withdrawal situation will have a black mark on their credit file because of the action, as the account will simply be considered settled.
An industry official from the credit referencing agency Equifax stated: ‘We don’t flag up whether an account has been withdrawn; we just highlight whether an account is open or settled. So in some respects, the Egg withdrawal of cards could work in a person’s favour.’
He also said: ‘We log that you have paid off a credit card balance, which will look good in the eyes of lenders. Also, one piece of advice I have always given people is - if you are rate tarting you should never leave a card open once you have moved the balance as the lender will only see the number of cards in your name. If you have too many cards you may be seen as too much of a risk. The Egg closure may help you also by reducing your card number and therefore increasing your creditworthiness.’
Egg announced recently that the credit cards of 161,000 customers were to be withdrawn, stating that this was because their credit profiles had fallen since they opened their accounts. However, many of the customers are disputing this, stating that their credit is perfect.
A recent poll by This is Money showed that around 43% of those affected had never missed a repayment, which contradicts what Egg officials stated.