‘Nationwide campaigns for positive order of payment’
December 12, 2007 at 10:45 am
The vast majority of all credit card providers operate a negative order of payment, meaning that your monthly repayment is used to pay off the cheapest debt first, leaving such items as cash advances (which attract a high interest rate), to accrue yet more interest. This may be good news for the provider’s profits but it’s certainly bad news for the consumer.
The Department of Trade and Industry (now known as the Department for Business, Enterprise and Regulatory Reform]) has announced that as of 1st October 2008 all providers will have to make clear to the consumer how the repayments are allocated. The following words must, by law, appear on each statement from next October: “If you do not pay off the full amount outstanding we will allocate your payment to the outstanding balance in a specific order, which is set out. The way in which payments are allocated can make a significant difference to the amount of interest you will pay until the balance is cleared completely.”
Nationwide claims to be the only credit card provider currently operating a positive order of payment and is campaigning to have other providers follow their example. They do not feel the DTI proposals go far enough and would like to see the statutory message preceded by the word “Warning,” as well as having the rates set out in the same place as the message, so that consumers do not have to go hunting for the information. They would also like the message to appear only on statements where the negative order of payment is relevant to the customer.
The divisional director of Nationwide, Jeremy Wood, says: “Many credit card providers use low introductory rates to lure people into opening an account. These offers can look very appealing, but when you scratch beneath the surface you discover that credit card holders often don’t receive the full benefit of these low rates.”
The “0% on balance transfers” is a common carrot dangled at the consumer, but an example of the type of situation where Jeremy Wood feels that consumers should be exercising caution. For example, if you were to transfer your balance across and withdraw £100 in cash you would receive a statement showing the balance transfer and the £100 cash withdrawal. If you paid off the £100, knowing that it attracted interest, and did not use your credit card again, you may be surprised to receive a statement the following month, still showing the £100 cash withdrawal (notching up interest) but a reduced amount on the balance transferred.
66% of us think it is important to find a credit card provider who operates a positive order of payment, and yet 69% of us do not have a clue as to how our own repayments are allocated. Nationwide reckons that this ignorance, combined with a large dose of apathy, costs us a staggering £500 million a year. The average person keeps the same credit card for six years, regardless of whether or not they are getting a good deal, and armed with this knowledge, there seem to be a lot of providers out there who are using this to their advantage.
'First Alert from Lloyds TSB'
December 7, 2007 at 3:34 pm
The experts say that using plastic is safer than cash, and that card fraud is actually less common that it used to be, thanks to the introduction of the Chip and PIN system. However, fraud is on the increase – by 16% in the cases of “card not present” transactions (for example internet, mail order and telephone sales) – and cases of card cloning are up by 3%. According to the UK’s Fraud Prevention Service, it takes an average of 201 hours to unravel the harm done by card thieves, so the thought of someone getting their hands on our card details is understandably worrying.
For customers of Lloyds TSB it seems that help may be at hand in the form of their First Alert service. This is the first of its kind to warn customers by automated phone call of the possibility of suspicious activity on their current account.
The service for credit card holders has been available since 2005, but earlier this year the bank decided to extend it to holders of debit cards. It means that valuable time will not be lost in recognising fraudulent transactions and will help customers negotiate the red tape involved when things do go wrong. Gerrard Schmid of Lloyds TSB, explained: “The system proved a huge success on credit cards and by extending it to our debit card customers we’re planning to crack down further on card fraud… the expansion of our ‘First Alert’ system to debit cards, will be a real asset.”
The call to the customer asks whether they recognise the transaction and, if they can confirm that all is well, that is the end of the matter. If, however, they are unable to give the all clear, they are put through to a Lloyds TSB employee who will assist them in making arrangements to freeze the account and obtain a refund for the fraudulent transaction. The system used, combines Lloyds TSB’s own fraud detection technology and a system provided by Adeptra, experts in the field of automated contact and resolution services for Consumer Credit and Risk Management.
'Halifax launches multi-currency ATMs'
December 7, 2007 at 3:27 am
Halifax has become the first high-street bank in the UK to launch multi-currency ATMs that will allow customers to withdraw cash from a current account or credit card in Euros and US Dollars. The machines will accept Visa and MasterCard credit and debit cards, dispensing Euro and Dollar banknotes in denominations of 20 at a competitive rate of transfer. Halifax customers and those with other banks will be able to use the ATMs, which charge a 0% commission rate. However, non-Halifax and Bank of Scotland bankers will be forced to pay a charge to use the service, in accordance with their bank’s terms and conditions.
The first multi-currency ATM was installed at the bank’s Old Broad Street branch within the City of London. Plans are already under way to set up more such machines around Britain. So far, Halifax has confirmed machines for Cannon Street in London Strand, London Fleet Street, Basingstoke, Chester, Dumfries, Southampton and Windsor. More will be rolled out during the next few months.
“Our customers have told us that the immediate availability of foreign currency would be a valuable addition to the wide range of services we already offer, and we plan to roll out more of these multi-currency ATMs in the near future,” explained Nigel Turkington, head of travel money at Halifax.
The machines, which are provided by Travelex, should prove popular with people looking to secure their travel money quickly and easily, particularly those going to the US, as the Pound continues to look strong against the US Dollar.
This summer, Tesco Personal Finance started a similar scheme, placing special Euro ATMs in selected Tesco supermarkets around the country. It proved so popular that the company quickly decided to up the number of machines to 20. Customer responses showed that people were especially taken with the fact that they could get their holiday money while doing their shopping.
Steward Gow, head of ATMs at Tesco Personal Finance, explained that convenience is the main appeal of multi-currency ATMs, noting that those placed near UK transport hubs are proving to be the most popular.
“We want to make travel money accessible for our customers. They can pick up their Euros at a competitive exchange rate at no charge whilst they do their weekly shop which is convenient. It’s an easy way for customers to get their holiday money,” he said.
“Initial customer feedback has been really positive with the emphasis on convenience. We want to improve our customers’ experience every time they deal with us and this trial will help us further understand their needs.”
The Tesco Euro ATMs can be found at a number of stores, including Ashford, Gatwick, Long Eaton, Altrincham, Glasgow, Bury, Hemel Hempstead, Chester, Finchley, Aylesbury, Port Glasgow, Dover, Hatfield, Andover and Newton Abbott. There are also five ATMs dispersed across Northern Ireland.
