Millions of "good" customers are being charged a fee, have had their account closed or limit cut
Elizabeth Colman
Credit card companies are cracking down on "good" customers as they look to recover millions of pounds in bad debts and lost revenue after the regulator imposed a cap on penalty fees.
Uswitch, the comparison site, said 2.5 million customers were informed last year that they will be charged a fee, have their account closed or credit limit cut.
Of these, a mere 16 per cent had missed payments or exceeded payments while the majority were "good" customers who paid off their bill in full each month.
More than half said they were making at least minimum repayments.
Uswitch said: "Credit card providers are taking drastic action to manage bad debt.The question is whether providers are simply trying to reduce risk and indebtedness, or whether they are just trying to filter out less profitable customers."
The crackdown will dismay high street retailers who are keeping a close eye on measures by banks to curb lending, after spending in shops reached its lowest for three years, according to the British Retail Consortium.
The survey was based on 2,097 credit card customers.
Simeon Linstead, head of personal finance at uSwitch.com, said: "We're not against credit cards providers curbing consumers' spending if their debts are genuinely getting out of hand. However, credit card companies who are taking action to close down or make changes to customers' accounts must be completely open about how and why they have selected those customers."
According to APACs, the industry body for credit card firms, 21.4 million credit cardholders regularly or always pay their bill in full out of 31 million credit card accounts in total.A
Mr Linstead said: "These customers are the least profitable for a credit card company to have on its books unless they withdraw cash, use their card overseas or get caught out by the order of repayments. They will not be contributing much to the £6.186 billion in interest made by the credit card industry last year."
Source: http://business.timesonline.co.uk |
