Amex interest rates up to 46%

Amex the popular credit card brand has increased its interest rates on one of its cards to 46%. Which in simple terms means that if you buy something for £100 it will cost you £46 in interest payments.

The British Airways Premium Plus card makes it one of the UK’s most expensive cards and is so far removed from the base rate that you would thing you are living in Zimbabwe.

There are many other cards out there that are averaging between 25% – 35% so it seems like the credit card companies are able to play their own game and charge as much as they like. The margin they are making in terms of profit is huge as the base rate is only 1.5% at the moment so the cost of borrowing for them is cheap compared to what they charge thier customers.

As the supply of credit dries up more and more people will turn to their credit cards to get by, this only perpetuates the debt cycle. There are new industry standards that have come into play which mean credit card companies have to give at least 30 days notice before increasing their interest rates. Also no interest rates increases can be made during the first 12 months of you having your card.

Cashback Credit Cards Popular in a Recession

In the current economic climate people are tightening their belts more than before making the Cashback credit card very popular. Also known as Rewards cards they offer the card holder an opportunity not to only have a competitive rate but the opportunity to earn points or money back depending on the amount spent.

As the credit card companies don’t like to give anything away for free, these type of cards are quite rare but they do exist. The American Express Platinum Card has always been a popular choice when searching for these type of cards. At the time of writing this they offer 5% cashback for the first 3 months of the card up to a total of £4,000.

Cashback cards are really aimed at those who clear their balances in full every month as the rates that are charged on these cards is quite high. Amex is currently charging 18.9%. There are other cars out there that also offer cash back like Barclaycard, Egg and MBNA. The Citi Shell Mastercard has an attractive 3% cash back on fuel spending, they have a rate of 16.9%

Credit Cards Holders Given Breathing Space

To a great sigh of relief, credit card holders have been given 30 days to work out difficulties in paying off their debt. The grace period will give card holders a chance to work out a payment plan using one of the free debt advice agencies.

If a managent plan is not agreed after 30 days activity will be suspended for a further 30 days. The Government have implemented new industry standards which require card companies to give you at least 30 days warning that they are about to increase your interest rate. This will give those that are already struggling to manage their credit cards a chance to cancel their account or even transfer the balance to another credit card. You may also be given the chance to transfer your balance to a personal loan with the same or a more competitve rate.

Poor Credit Rating?

What do I do if I have a poor credit rating and I want to apply for a credit card. The video below will give you some idea of the steps to take if you are in this situation.

Here are some of the points that the video covers:

• What is a credit rating?
• What should my credit rating be?
• Who carries out credit ratings?
• What can I do if I have a poor credit rating?
• What is a credit check?
• Who carries out credit checks?
• Why do I need to have a credit check?
• I have been refused credit, what can I do about this?
• What is a credit report?

Credit Cards: Credit Ratings

Credit Card Basics

If you want to find out the basics before applying for a credit card then watch the video below.  A lot of it is common sense but watch it anyway you might learn something.

The Video covers all the topics below:

• What is a credit card?
• How do I get a credit card?
• How old do I have to be to get a credit card?
• How can I find the best deal for my credit card?
• How many credit cards can I have at any one time?
• How often do I have to pay off a credit card?
• How do I pay off a credit card?
• What happens if I go over my credit limit?
• Can I increase my credit limit?
  

Credit Cards: Credit Cards Defined

Interest Rates Down Credit Card Rates up!

Interest rates are now at 1.5% so why are the rates being charged by credit card companies going up.

This seems a bit unfair as clearly the Card companies profit margins are expanding in proportion with the decrease in interest rates. Reports have revealed that interest rates on average are now 18% but I am sure there are many people out there that are on rates of over 25%.

Credit Card companies have never tracked the Bank of England’s base rate so they seem to be in a league of their own. There has been a huge increase in bad debt so the credit card companies have to pay for this somehow so your increase in borrowing rates is to fund this. Credit Cards have a cap on the amount they can charge for penalties for not paying set at £12. With all this in the wash the Card companies are happy to increase their rates as with the recession looming bad debts are going rise even more.

Bear in mind this is not a blanket scenario. Unfortunately your personal credit rating comes into play aswell. Individuals will have their own rate applied depending on what risk the companies see them as. A technique in this case called risk-based pricing is applied to an individual so all rates vary from person to person.

Card companies have promised to apply “fair principles” when applying risk-based pricing giving individuals notice of changes and provide alternatives to the person affected. The new rules state that nothing can be altered for the first 12 months and there would have to be 6 month intervals between rate hikes.

You can read these rules here.

Credit Card Fraud on the increase

New technology is being introduced by HSBC to combat the increasing levels of Credit Card Fraud being experienced at the moment. Credit Card fraud has risen by 14% in the first 6 month of 2008 and figures show that fraud abroad makes up 40% of all card crime.

HSBC will be screening all credit card transactions in real time making decisions in seconds. In the past only 25% of card transaction where checked which gave way to a huge gapping hole of opportunity. Credit Card fraud actually dropped started falling for several years but has taken a dramatic turn in 2007. Figures reveal that credit card fraud could have exceeded £600 million in 2008.
Trying to comabt card fraud is a constant battle as new and improved techniques are introduced fraudsters are always finding ways to get around them. Chip and Pin was succesful for about 18 months before fraudsters found a way to get around this, so more sophisticated measures are being adopted by Banks and card companies.

Find out more here.