Credit cards Updated:
Halifax has revealed it is to simplify the interest rates it charges on the credit cards of existing customers. From August 2011, the bank said existing customers will be moved onto a single rate of interest, specific to the individual and how they use their card.
As a result, there will no longer be different rates charged for purchases and cash withdrawals, making it easier for customers to understand the interest being applied across their account.
The new rate will be an average of the current standard interest rates applied to the balances on their credit card between January and March 2011.
The bank also hopes to increase transparency by linking interest rates to the Bank of England base rate.
With a customer's annual interest rate being made up of their single personal rate plus the base rate, Halifax says it will be using a measure that is recognisable to customers, and which will reflect any movements in pricing in a completely transparent way.
The bank also revealed its intention to outline the circumstances when it might reprice a customer's personal rate in the future and to give reasons why a rate has changed.
From October, Halifax is to set out typical examples of what could cause a future reprice in the terms and conditions and on customers' statements.
Instances when a customer might expect to see their credit card rate change include straying from the conditions of their credit card account, perhaps by missing several payments or going over their credit limit multiple times, or by not keeping to the conditions of another product they have with Lloyds Banking Group, which owns Halifax.
The rate might also change if the type, value and frequency of transactions suggest riskier behaviour, such as an increase in cash withdrawals, or if there has been a change to their financial status as recorded with external credit reference agencies.
The bank has also reserved the right to alter rates if it experiences or anticipates changes to the cost of running the business, such as having to hold more regulatory capital.
If a customer's interest rate is repriced, Halifax said it will explain the exact reason for any change, and will give customers the option to close their account and keep their existing rates.
Existing credit card customers are to be written to in May with details of the changes and how they will personally affect them.
New customers and Clarity card customers will not be included in the changes initially, but will be notified separately and moved onto the new pricing structure in 2012.
Find the best credit card rates - Compare credit cards
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
Moneyfacts.co.uk will, like most other websites, place cookies onto your computer’s
hard drive. This includes tracking cookies.