Credit card firm to hit customers with hikes of up to 7pc
ONE of the biggest credit card providers is pushing up the interest rates it charges its customers, and making it more expensive to make payments through post offices.
AvantCard, which took over the business of MBNA, is increasing rates by up to 7pc, the Irish Independent has learned.
The new rate for purchases using the cards will be 100 times higher than the European Central Bank key lending rate of 0.25pc. Thousands of customers of AvantCard have been told the interest rate they will be charged for making purchases on their cards are due to rise from 17.9pc, to 24.9pc.
This is one of the highest rates in the market.
For cash withdrawals on cards issued by AvantCard, the interest charged is going from 23.9pc to 25.9pc.
And the credit card provider will charge between 83c and €1.15 from the end of May for paying a bill in a post office or by posting a cheque. Credit card rates from all providers have shot up since the onside of the financial downturn in 2008.
AvantCard is thought to be the largest player in the credit card market. Market share figures are closely guarded by the industry players.
The company told its customers in a letter: "These fees are being introduced to offset fees incurred by AvantCard and are a change to the terms and conditions governing your credit card account. No interest will be charged on these processing fees."
Customers will no longer have the option of using credit card cheques from the end of June. Asked about the interest rate rises and new processing fees, a spokeswoman for the company said the higher interest rates reflected the higher costs of providing credit to consumers.
"AvantCard, like other providers, periodically reviews customers' interest rates and may make changes based on these reviews. If changes are made, customers are given two months' written notice.
"Following a recent review, AvantCard has written to a number of customers giving notice of its intention to increase the interest rates on their cards," the company said.
Customers have been given more than two months to adapt their payment methods before changes take effect.
"AvantCard continues to provide a number of other free methods of payment through their telephone and internet banking services or by way of direct debit," it said.
AvantCard operates from Carrick-on-Shannon, Co Leitrim.
The transfer from MBNA to AvantCard was beset by problems, prompting the Spanish and Irish regulatory authorities to reveal they were keeping a close watch on the transfer operation.
This time last year AvantCard was forced to apologise after its cards were rejected and customers were unable to make payments online.
The card issuer has not been taking on new customers for more than a year now while it beds down its operations here.