Top Credit Card News

Derin Clark

Derin Clark

Online Reporter
Published: 19/03/2020

The Financial Conduct Authority (FCA) has announced that it is suspending banks’ obligation to suspend the credit cards of those in persistent debt who have not responded to their lender’s communications about their debt due to the concern of the Covid-19 outbreak on consumer’s finances.

The credit card persistent debt rules, which were starting to come into effect, would have given banks the ability to suspend credit cards held by customers who were in persistent debt. While the rule will still stand, the FCA has stated that customers will have until 1 October 2020 to respond to their bank’s communications about their persistent credit card debt. As a result of this, firms are not obliged to suspend customers’ credit card accounts due to persistent debt, even if they have already received communication from their bank about this.

Commenting on this announcement by the FCA, Eleanor Williams, finance expert at Moneyfacts.co.uk, said: “Those who may have already been finding it difficult to keep up with their minimum credit card payments before the Covid-19 outbreak may find some comfort in the FCA’s decision to suspend its credit card persistent debt rules. If anyone is worried about managing their finances in this difficult time, they should consider speaking with an advisory service and contacting their finance provider to discuss possible solutions to any concerns as early as possible.”

Consumers looking to spring clean their finances by managing their credit card debt may want to consider applying for a 0% balance transfer credit card.

0% balance transfer credit cards can be a cost-effective way for those with credit card debt to repay the money they owe. These credit cards allow borrowers to transfer their existing credit card debt to the new card and offer an interest-free period in which they can pay off the full amount. This helps to clear the debt quicker as repayments do not need to factor in additional interest costs, as long as the full amount is repaid within the interest-free period. Saying this, many 0% balance transfer credit cards charge a transfer fee, which makes the total amount to be repaid higher than the existing credit card debt.

Borrowers should also be aware that an application for a 0% balance transfer credit card is subject to a credit check, which means those with a low credit rating might struggle to get approval, especially on the top deals.

For those considering a 0% balance transfer credit card, here we’ve looked at the five best deals available in the charts today.

Fears that those in credit card debt could have their credit cards cancelled without warning were put at ease with this week’s announcement from the Financial Conduct Authority (FCA) that lenders needed to review their approach to persistent debt customers.

The FCA, a finance industry regulator, has instructed lenders to help those in a cycle of debt for at least three years by agreeing plans with customers to pay off their debts. As part of this requirement, lenders have been contacting customers to urge them to discuss repayment plans with their lender. However, it was feared that those in persistent debt could find that their credit card had been cancelled without warning, even if they had made repayment plans with their lender.

This week’s announcement from the FCA has stated that lenders would not be allowed to suspend a credit card without having an objectively justifiable reason, with the regulator highlighting concerns that lenders may cancel or suspend credit cards for everyone in persistent debt. In addition to this, the FCA has revealed concerns that customers may not respond to letters from their credit card provider, in which case it urged lenders to encourage customers to speak with them to discuss potential repayment plans and help find solutions if customers cannot afford the proposed repayments.

Commenting on this week’s announcement, Jonathan Davidson, executive director of Supervision for Retail and Authorisations at the FCA, said: “Under our rules, firms must help customers to reduce the level of debt they have on their credit card more quickly. If a customer cannot afford the firm’s proposals for how to do this, the firm must offer forbearance, potentially including reducing, waiving or cancelling any interest, fees or charges.

“My advice to consumers is don’t bury your head in the sand. If you can’t afford to meet the repayment schedule that the credit card firm is suggesting, don’t be afraid to tell them. If we find firms are not offering their customers the appropriate level of help, we will not hesitate to take action.

“If the firms do this right, we estimate that this could save customers up to £1.3bn a year in lower interest charges.”

Rachel Springall, finance expert at Moneyfacts.co.uk, added: “The FCA may well have thrown struggling credit card borrowers a lifeline today, as its warning could stop lenders from cancelling a credit card without a justifiable reason.

“There may well be borrowers out there who are keeping up with the minimum repayments but are unable to pay more each month, and these borrowers need support.

“Since the persistent debt proposals were announced, credit card providers have cut down the length of interest-free balance transfer offers, of which there is a record low amount of deals available now. Once the longest offer was for a 43-month interest-free balance term, while the longest today is just 29 months, a significant difference.

“Hopefully this interjection from the FCA will protect vulnerable consumers who need more guidance on ways to reduce their debts. However, if card providers are forced to reduce or abandon interest charges on debts, then this could impact the range of credit card deals that they are prepared to offer overall. It will be interesting to see what credit card providers will do in the months to come."

Borrowers wanting to transfer the balance on their credit cards will be pleased to see that Barclaycard and Sainsbury’s Bank have made their 0% balance transfer cards more competitive.

Barclaycard is now offering £20 cashback to customers who transfer at least £2,500 onto either of its Platinum 28 Month Balance Transfer Visa or its Platinum No Fee Balance Transfer Visa. Platinum 28 Month Balance Transfer Visa offers 0% interest for 28 months from the date of account opening and charges an introductory balance transfer fee of 1.75%, while its Platinum No Fee Balance Transfer Visa offers 0% interest for 18 months and has an introductory offer of no balance transfer fees.

In addition to this, Sainsbury’s Bank has extended the 0% interest term on its Dual Offer Credit Card Mastercard by five months and is now offering an interest-free term of 27 months. This card charges an introductory balance transfer fee of a 3.00%. While this card now has the longest term on a card that offers dual 0% balance transfers and purchases, those looking for the longest interest-free term on just balance transfers should consider Sainsbury’s Bank’s Balance Transfer Credit Card Mastercard. This card offers the longest interest-free balance transfer term of 29 months that is currently available in the 0% balance transfer chart. It charges an introductory balance transfer fee of 2.74%.

Figures released by UK Finance today show that consumers have reduced the amount spent on credit cards year-on-year, while debit card spending has increased.

According to the figures, during October 2019 consumers spent a total of £16.6bn on credit cards, which was a 2.7% drop on the total spent during October 2018. UK Finance also found that credit card debt grew by 3.3% during October 2019, which, although is a rise in debt, is significantly down from its recent peak of 8.3% at the start of 2018.

Recent News

news icon
The best 0% purchase deals in the run-up to Christmas

20th November 2019

With just five weeks until Christmas Day and the shops already full of Black Friday deals, time is running out to get all the Christmas shopping done

With just five weeks until Christmas Day and the shops already full of Black Friday deals, time is running out to get all the Christmas shopping done

Read More
news icon
0% interest terms cut as Christmas shopping season begins

12th November 2019

With Christmas adverts already on TV and just over two weeks until Black Friday, the festive shopping season has already begun, however consumers are being warned that if they use credit cards to pay for their Christmas shopping they will have less time to pay off debts

With Christmas adverts already on TV and just over two weeks until Black Friday, the festive shopping season has already begun, however consumers are being warned that if they use credit cards to pay for their Christmas shopping they will have less time to pay off debts

Read More
news icon
Post Office Money® launches two credit cards

6th November 2019

Post Office Money® has partnered with Capital One UK to launch two new credit cards, which will be available in branch from 2020

Post Office Money® has partnered with Capital One UK to launch two new credit cards

Read More
news icon
Credit card spending increases year-on-year

11th October 2019

Credit card spending is up by 6.4% year-on-year, with a total of £17.9bn spent during July 2019 alone, recent data from UK Finance reveals

Credit card spending is up by 6.4% year-on-year, with a total of £17.9bn spent during July 2019 alone, recent data from UK Finance reveals

Read More
(showing 1 to 4 of 50) (showing 1 to 4 of 50)

Search Credit Card News

Search Credit Card News

Most Popular Credit Card News

news icon
FCA suspends credit card persistent debt rules due to concerns of Covid-19 on finances

19th March 2020

The Financial Conduct Authority (FCA) has announced that it is suspending banks’ obligation to suspend the credit cards of those in persistent debt

The Financial Conduct Authority (FCA) has announced that it is suspending banks’ obligation to suspend the credit cards of those in persistent debt

Read More
news icon
Five of the best balance transfer credit cards

5th March 2020

Consumers looking to spring clean their finances by managing their credit card debt may want to consider applying for a 0% balance transfer credit card

Consumers looking to spring clean their finances by managing their credit card debt may want to consider applying for a 0% balance transfer credit card

Read More
news icon
Competition increases in balance transfer credit card chart

21st January 2020

Borrowers wanting to transfer the balance on their credit cards will be pleased to see that Barclaycard and Sainsbury’s Bank have made their 0% balance transfer cards more competitive

Borrowers wanting to transfer the balance on their credit cards will be pleased to see competition in this chart increase

Read More
news icon
Consumers spending less on credit cards

16th January 2020

Figures released by UK Finance today show that consumers have reduced the amount spent on credit cards year-on-year, while debit card spending has increased

Figures released by UK Finance today show that consumers have reduced the amount spent on credit cards year-on-year, while debit card spending has increased

Read More

More Money and Finance News

Get our weekly newsletter

Weekend Moneyfacts is available free by email to all Moneyfacts.co.uk users.

Please send me Weekend Moneyfacts, Savers Friend and selected third-party offers.

Cookies

Moneyfacts.co.uk will, like most other websites, place cookies onto your device. This includes tracking cookies.

I accept. Read our Cookie Policy