Summary
Members of Parliament were shocked at Vanquis's new credit card offering, which charges an annual percentage rate of up to 69.5%. To make matters worse, the card charges its users an annual fee of 19 pounds. Consumer advocates are also appalled, as the credit card is aimed at poor families that have had credit problems in the past. This new card is expected to increase pressure on the government to pass legislation limiting credit card interest rates.
Original source:
http://money.guardian.co.uk/news_/story/0,1456,1411444,00.html
Details
- new credit card aimed at millions of low-income families is to charge interest at up to 70% - the highest ever charged by a credit card company.
- MPs and debt campaigners yesterday condemned the rate, which is 15 times the Bank of England base rate and triple the standard rate on other cards.
- He added: "People on a low income tempted by it need to be given a clear financial health warning."
- Debt on our Doorstep, an umbrella group that includes Oxfam, credit unions and Church Action on Poverty, said: "It's an absolute disgrace that Vanquis should even be suggesting people borrow money on a credit card at that rate."
- Vanquis is a subsidiary of Provident Financial, the biggest doorstep lender in the country, and is the subject of an industry-wide investigation by the Competition Commission into the home credit market.
- To find customers, Vanquis will trawl through the files of private credit rating agency Experian - it holds data on almost everyone in Britain - to identify individuals rejected by other lenders often because they have run into debt problems in the past.
- Advertiser links Stock Share Trading Buy and sell stock online with MyTradz.com.
- Vanquis managing director Les Stillwell yesterday defended the national launch of the card, which was successfully piloted in part of Scotland last year.
- He said: "The big problem with credit card lending is not the interest rate but the amount of credit that is granted.
- If they keep their payments up, the rate will be reviewed, typically falling by 3-4% a year."
- But Debt on our Doorstep said it will now increase pressure on the government to amend the consumer credit bill to include a clause allowing the government to impose a maximum interest rate cap.
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