Sunday 24 September 2017

A quarter of a million credit card accounts shut in last three years

Charlie Weston Personal Finance Editor

SAVVY consumers have closed off 260,000 credit card accounts in the last three years and paid off almost €500m on their cards as they spurn the high interest charged.

Some €70m was paid off on cards alone in April, new figures from the Central Bank show.

But despite large numbers of credit card accounts being closed down, there has been a rise in the average amount owed on each card.

This signals that customers will multiple cards are moving all the debts on to just one -- which will not necessarily save on repayments, but would make it easier to manage.

The average consumer owes €1,300 on their credit card, with little sign that they are getting on top of their debt. This is up from €1,274 earlier in the year.

Personal finance experts said that some people were so short of cash that they were using credit cards to juggle their payments each month.

With interest rates on credit-card debt as high as 22.7pc, wiping out this debt could take you up to three years if you only pay €50 a month, according to the National Consumer Agency (NCA).

Rates

The worst rates at present are 22.7pc with AIB MasterCard and AIB Visa Card, and 22.6pc with Ulster Bank Classic MasterCard, according to a survey using the NCA's online comparison tool. The best rates are 13.6pc with AIB Click Visa Card, 13.8pc with Bank of Ireland Clear Credit Card and 14.4pc with National Irish Bank MasterCard Platinum.

Meanwhile, one of the largest credit card providers in the market, MBNA, refused to say yesterday if it would be forced to refund customers who were mis-sold payment protection insurance on their cards.

Allied Irish Bank and Bank of Ireland have refunded over €4m to customers that were mis-sold payment-protection insurance.

Bank of Ireland said on Tuesday that it has now refunded more than 1,500 customers an average of €660 each after an internal review discovered they had taken out credit card insurance on which they could not make a claim.

Last month AIB said it was going to refund over €3.1m in payment-protection insurance premiums to 11,500 customers.

Payment-protection insurance covers repayments on loans, mortgages and credit cards if people fall ill or lose their jobs. Many people were sold the insurance even though they had no income and could not make a claim.

The Central Bank is probing the sale of the insurance.

But now MBNA has refused to say if it too will be forced to refund customers over payment insurance.

MBNA told the Irish Independent: "We deal with every customer complaint on a case- by-case basis. It is not our policy to disclose details of discussions we may have with regulators."

A number of customers of the company were in contact with this newspaper questioning if they were entitled to a refund on payment-protection insurance on their credit card.

Irish Independent

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