Money Saving Tips

Credit card giants Many banks have been considerably increasing their interest rates on credit card users, while trying to squeeze out cash from these hard pressed customers in various methods, contradicting Prime Minister’s demand for them to treat their credit card customers fairly. In November last year, Prime Minister Gordon Brown called upon banks and other lending institutes to consider a 'new responsible approach to lending' as it is unacceptable for the industry to increase cost on borrowing at a time when consumers were more susceptible. Whilst the base rate, (the main interest rate in the economy) set by the Bank Of England, upon which other rates are based is cut down to a record low of 0.5%, banks and others have imposed punishing increases on the cost of using credit cards. Some have added as much as 4 points to the headline interest rate charged to customers over the past year, taking the figure up to almost 20%. As such, credit rates have gone up by an average of half a point compared to a year ago - a period when the Bank of England base rate has been cut from 5.25% to just 0.5%. By figures, it is evident that banks are fattening up their profit margins while making their customers pay the price of terrible losses on investments overseas. According to consumer group identification, some banks have even been propped up by taxpayers' cash. The group found that 28 credit card providers of widely-held credit cards had either increased interest rates or other charges, reduced the number of days to pay or reduced the number of interest-free days given to shoppers. Some of the examples are: The Royal Bank of Scotland group, which includes NatWest (effectively 58% owned by the Government) has increased rate by four points to 16.9%, while a similar rise has been imposed by the Mint card. Hefty increases of 3 points have been applied by the Abbey and the Post Office. The Abbey rate rose to 18.9% and Post Office, by19.9%. Both MBNA and Alliance & Leicester have reduced the interest-free period and number of days to pay. Effectively, card-holders have to clear their debt earlier than in the past or they may have to face up a penalty charge. Some providers ie., Ulster Bank increased its introductory balance transfer rate from 0 per cent to 4.95% and also introduced a transfer fee of 2.9% to its introductory offer on two credit cards, while Debenhams have doubled the minimum cash withdrawal fee on its Mastercard credit card from £1.50 to £3 and will now take a charge of 3% of the amount of money withdrawn via a credit card, up from 1.5% a year ago. Egg, have left their headline APR alone to attract new customers, but have increased rates for many existing customers by as much as 7 points.