Credit Card News

Millions of cardholders will be able to use their Wirecard-issued cards again from today. Last night the Financial Conduct Authority (FCA) lifted its restrictions on Wirecard and allowed the fintech firm to resume its services.

The regulator intervened and suspended Wirecard’s activity last Friday following the discovery of €1.9bn missing from the firm’s German parent company, Wirecard AG. EY, the auditor of Wirecard stated that there were “clear indications that this was an elaborate and sophisticated fraud, involving multiple areas around the world in different institutions, with a deliberate aim of deception.”

The regulator’s focus was to make sure that the money of customers held in safeguarded accounts was protected. Wirecard-issued cards operated under e money and payment services regulations and this means the funds held on them is not protected by the Financial Services Compensation Scheme (FSCS). Instead the regulation requires that monies connected to the operation of the cards is held in bank accounts which are not connected to the trading activities of the issuing company.

After a period of review between the FCA and Wirecard, they have now decided that the firm can continue to operate and enable the usage of their cards. However, Wirecard remains under close supervision by the FCA and, while it can return to offering e-money and payment services, it does have restrictions on where assets can be held and transferred.

Cards issued by Wirecard in the UK under the Mastercard scheme will be allowed to operate from today and any cardholders experiencing difficulties should contact their card provider. However, in an announcement made on Saturday 27 June 2020, Visa has decided to remove authorisation of payments through Wirecard-issued cards. The global payments company said in its statement “We’re sorry if this has impacted your ability to pay or access funds, and recommend you contact the company that provided your card to receive more information.”

Find out more about digital banking apps and cards.

Last week the Financial Conduct Authority (FCA) decided to freeze the operations of Wirecard Card Solutions Limited (Wirecard) after accounting irregularities were identified at its German parent company. The Fintech was responsible for powering the transactions and funds for a significant number of UK prepaid cards under a range of different brand names.
Those holding a card issued by Wirecard cannot currently access their funds, make transactions or use their card at a cash point, online or in a shop. The funds held on these cards are not covered by the Financial Services Compensation Scheme (FSCS) but Wirecard is required by the FCA to hold these funds in safeguarded accounts with a UK authorised bank or credit institution. This means the funds remain protected and separate to monies used by Wirecard for their day-to-day business.
While the money held on these cards is expected to be safe, cardholders remain waiting to hear when their funds will be released back to them. Those who have their benefits paid to cards issued by Wirecard will need to switch to an alternative prepaid card account or digital banking app and let the Department of Work and Pensions (DWP) know their new account details. Those who have had benefits paid to their Wirecard issued card on or before 26 June 2020 will find they cannot access their money now and the DWP is not able to reissue the payment. Those in financial distress as a result should contact the DWP.
Those due to receive benefit payments from 29 June 2020 onwards to card issued by Wirecard should receive a call from the DWP about the situation and the fact their benefit payment cannot reach their card. Any new payments may take up to three days to reach the new account.

Consumers looking for an interest-free credit card deal will be disappointed to find that the number of 0% credit cards available is at a record low.

Figures due to be published in the Moneyfacts UK Credit Card Trends Treasury Report show that the number of introductory interest-free purchase deals has fallen to 55, down from 68 available in March 2020. At the same time, the number of introductory interest-free balance transfer deals has also fallen, down from 73 available in March 2020 to just 56 available today.

“Credit card providers act quickly when the risk to take on debts escalates and right now there is a refocus of credit card propositions to mitigate debt write-offs,” explains Rachel Springall, finance expert at Moneyfacts.co.uk. “This echoes the movements seen after the financial crash – indeed, between June 2008 and June 2009, the number of 0% purchase cards fell from 112 to 85.”

Those looking to switch a credit card balance will find fewer cards offering the best long term 0% transfer offers. Lloyds Bank, Halifax, Virgin Money and Sainsbury’s Bank have all cut the length of their balance transfer deals in recent weeks.
Virgin Money has made some of the steepest cuts to the balance transfer terms across three of its credit cards. The Virgin Money All Round Credit Cards at 20 and 23 months have reduced by five months, while the 0% Balance Transfer Credit Card at 24 months has reduced to 16 months. Virgin Money still has a 27 Month Balance Transfer Credit Card available with a low transfer fee of 1.45%.

Lloyds Bank and Halifax have reduced their credit 0% balance transfer offers by two months from 20 months to 18 months. Sainsbury Bank continues to be a consistent provider of long term 0% balance transfer deals, even after the Bank reduced its Balance Transfer Credit Card by two months to 26 months, and their Low Balance Transfer Fee Credit Card by one month to 25 months.
Those looking for a balance transfer card with zero fees to transfer can find the longest deal from Santander All in One Credit Card. This credit card offers a 0% balance transfer period of 26 months.