Credit cards Updated:
Lisa Taylor from Moneyfacts.co.uk comments: “Consumers looking for fixed long term 0% deal on their purchases and balance transfers will be disappointed to hear that yet another card provider has reduced its 0% offer.
“The Bank Credit Card provided by HSBC has seen its 0% deal on purchases and balance transfers reduced to six months from the competitive nine month offer launched in November last year. Additionally its standard APR has increased to 14.9% from 13.9%, for new customers.
“This is a double blow for those consumers who may wish to benefit from the introductory offer, yet keep their card with the same card issuer beyond this term. Surely this is the consumer type banks would benefit from retaining.
“HSBC is however, only one of a long list of providers to assume this line of action. Earlier this month we saw the Halifax/BOS One Visa reduce its 0% balance transfer deal from 12 months to three, while increasing its standard purchase rates by 3% for new customers.
“These moves, on the back of those recently announced by Tesco Personal Finance and John Lewis, only strengthen the case that card provider’s profits are suffering at the hands of ‘rate tarts’. In an attempt to claw back losses, providers are resorting to amending or withdrawing the headline offers originally designed to entice new business.
“The 2005 financial results of Barclays, published this week, highlights the size of this problem with Barclaycard showing reducing profits of 19% and a startling rise in the levels of bad debt provision, increasing 44% from £337m to £1098m. Barclaycard concludes this is partly a result of delinquent balances and lower recovery rates from customers.“
Lisa continues: “If consumers feel in control of their financial situation and confident of their ability to manage their debt, there are still some competitive credit card deals to be found. But remember they don’t offer a long term solution to debt management. If current market trends continue these attractive offers that we used to take for granted may become few and far between or, as we are seeing, the competitive terms previously offered are falling by the wayside, as banks attempt to contain their already rising bad debt levels and manage their falling profits.”
How things have chaged in less than 4 months
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