Study reveals poor level of information from credit card providers
A study that has been carried out by the consumer campaign group Which? has shown the poor level of information and knowledge that is provided by many of the best known credit card providers in the country. A mystery shopping exercise was carried out by the consumer group, and showed that nearly all advisors were giving wrong or misleading information with regards to make claims for refunds under Section 75 of the Consumer Credit Act.
This section of the Act related to consumers being able to get refunds on purchases of £100 or more in value where there something has gone wrong with the purchase of if the company goes bust. Researchers contacted twelve of the best known credit card providers, and in 71 out of 120 calls the advice given was inaccurate and useless. Out of 1230 advisors only ten even referred to the Act, and only one of the researchers was given the right information when it came to the limits on claims.
Many of the mystery shopper received wrong information relating to where they could get more help or make their claim. Bizarrely, NatWest told the mystery shopper to pursue the claim for an undelivered sofa through ATOL, which is a company that covers airline failure. Barclaycard directed the caller to the local council, and Lloyds TSB told the caller to contact the Ministry of Justice.
A Which? spokesperson said: ‘It’s not as if the rules on credit card claims are complicated. This situation is unacceptable – companies must accept that advice really matters. Consumers are potentially missing out on money they’re owed because they’ve been misinformed. The industry must know the rules, and it shouldn’t be up to the consumer to remind them of their rights.’
Contactless cards not always appreciated by consumers
When contactless payment cards started being rolled out in the UK it was hoped that they would offer nothing but benefits. Providers pushed the benefits of these cards to consumers, highlighting how it would save them scrabbling around for small change, make transactions faster and easier, and increase convenience. They also said that the cards would help retailers to deal with transactions more quickly, thus reducing queues.
Contactless technology is designed for use where consumers are making a purchase to the value of £10 or £15 or less. This could be anything from a morning coffee and bagel to a newspaper, taxi cab, or other low cost purchase. As long as the seller has access to a reader the contactless card can be used. No signature is require for payments to this value, and no PIN is required – all that needs to be done is for the card to be tapped against a specialist reader, and the money is the automatically debited from the account.
A number of providers, including Barclaycard, MBNA, and Virgin Money, have now made their cards into contactless models, but this means that they are now being pushed onto consumers that may not necessarily want them. Some consumers are worried about the security of their accounts because of the lack of need of proof of identity, signature, or PIN. Card provider have said that the card is designed to only accept a number of transaction to the value of £50 within a certain period before a PIN is requested, but not all consumers are happy with this.
One Barclaycard customer said: ‘These cards make theft so much easier and card theft more attractive. I have objected strongly to Barclaycard, who say there is no alternative card but that I could pay a fee to protect my card.’
Credit cards mean you can buy now pay later
Over recent years credit cards have received a lot of bad press with regards to how they have plunged people into high levels of debt, and how they leave people open to temptation when it comes to spending money that they don’t have. However, one report has pointed out that with the right card, and a sensible attitude to spending and repayments, consumers could find that credit cards provide a very effective alternative to other forms of finance.
According to officials credit cards can work out far cheaper than other forms of finance if consumers want to buy now and pay later, but this is dependent on the user’s ability to find the right card as well as to be sensible with regards to spending on the card and making repayments.
Consumers that opt for 0 percent purchase credit cards are able to make purchases now and enjoy a generous period of interest free credit without the worry of having to pay any interest on the debt. However, in order to make sure that the interest is not added back on cardholders will need to make sure that they always make at least the minimum repayments and they clear the debt on the card within the specified interest free period.
One official said: “As long as you are able to use your card sensibly and make the repayments on time you could find that a 0 percent interest credit card is the most affordable way to buy now and pay later, as you can get away with paying no interest at all on your spending.”
There are a number of 0 percent purchase credit cards available on the market, and those interested in using one of these cards should make sure that they compare a number of different deals in order to find the right one. By comparing different deals users are able to find a card that offers a generous amount of interest free credit, which means that the cardholder has longer to repay the balance on the card without having to pay a penny in interest.
Sensible use of a o percent purchase card will work out far cheaper than something like an overdraft or personal loan, as you will not pay anything more than the purchase price of your goods as long as you clear the balance in the interest free period.
Millions used credit cards to cover rent and mortgages last year
For many people 2010 was a hugely difficult year financially, and with many still suffering from the effects of the global financial crisis and the recession, money was tight in a huge number of households. This had a knock on effect on the ability of both homeowners and renters to pay their mortgages and rental payments, and alternative solutions had to be considered in order for households to keep a roof over their heads.
According to recently released figures millions of people turned to credit cards in order to cover their rent and mortgage payments last year. It is thought that around 2.6 million people took out money on a credit card last year in order to make a payment on their mortgage or rent. The figures were released by the housing charity Shelter, with officials from the charity saying that finding money to make these payments had been a ‘daily struggle’ for many households.
Shelter officials said that in 2008 and 2009 around 4 percent of households had used credit cards to cover rental and mortgage repayments, but last year this figure increased to around 6 percent, as the financial struggles facing households worsened. The figure may continue to get worse this year, as the government cutbacks start to take effect and job losses loom on the horizon.
An official from Shelter said: ‘This is a totally unsustainable situation. It is one we fear could see thousands more pushed into the spiral of debt, eviction or repossession and ultimately homelessness. Using credit cards to pay the rent or mortgage is simply robbing Peter to pay Paul. It is the worst possible course of action.’
Another industry expert added: ‘If you need cash, you could look at alternative forms of borrowing such as personal loans, which currently have cheaper rates than the majority of cash rates on credit cards.’