How you will benefit from the changes in the credit card industry

In March this year, we reached a joint commitment with the Government to make changes to provide a better deal for credit card customers. The result is five rights that will help to give you more control, more flexibility and more choice when managing your credit card.

Here are the changes that we will be introducing, with a few words on what they could mean for you:-

1. Right to Repay

• Paying off the most expensive debt first
  • What does this mean? If your card has a balance, your monthly payment will go towards paying off balances with the highest interest rate first.
  • What will it mean for you? This could reduce the amount of interest you pay. For example - say you transferred £1,000 from another card at 0%, withdrew £50 cash at 28%, and spent £300 on a washing machine with a purchase rate of 18%. Any payment you make would pay off the cash withdrawal first, as this has the highest interest rate, then the washing machine, and finally the balance transfer.
• Minimum payments
  • What does this mean? For new credit card customers the minimum payment will always cover the interest, account fees and default charges, plus 1% of the remaining balance.
  • What will it mean for you? New customers can make payments to help pay off the balance sooner. You can always make more than your minimum payment and the more you pay, the sooner you’ll pay off your balance and the less it will cost you.

2. Right to Control

• Managing your credit limit
  • What does this mean? This means you can reduce your credit limit at any time. You can even do this online.
  • What will it mean for you? You choose the credit limit you feel comfortable with. If you feel it’s too high for your needs at the moment, you can ask to have it reduced.

3. Right to Reject

• Interest Rate Increases
  • What does this mean? If your interest rate goes up, you will have 60 days to reject the change. You will be sent a letter and a follow-up reminder telling you about the increase. If you decide to reject the increase, your account will be closed. However, you will be able to pay off your balance at your current rate.
  • What will it mean for you? You will have two months to decide if you wish to reject the increase. With the letter and follow-up reminder that you’ll be sent, you will also have more notice about changes to your account.

4. Right to Information

• Minimum Payments Warning
  • What does this mean? If you make only the minimum payment (or low payments) for several months in a row, we will write to let you know.
  • What will it mean for you? You will get the information you need to help you make the best choices for paying off the balance on your card.
• Future credit limit increases
  • What does this mean? If we decide to increase your credit limit you will get at least 30 days notice in writing before we do so, along with a simple way for you to opt out of receiving the increase at any time.
  • What will it mean for you? You will get advance notice of the change and it’s now easier to opt out – you can even do it by text.

5. Right to Compare

• Annual statement
  • What does this mean? Your annual statement will give you clear information on how much your credit card has cost to use over the last 12 months.
  • What will it mean for you? You will be able to see what your card has cost and easily compare it with different cards. This will help you save money by choosing the card best suited to your needs.