Sunday 22 April 2018

Lenders get picky as credit card rate hike due

Charlie Weston Personal Finance Editor

THE two biggest banks in the country are to hike their credit card rates, the Irish Independent has learned.

The revelation about Bank of Ireland and AIB came as it emerged that six out of 10 applications for a credit card are being refused as lenders cherry-pick the best customers.

Last month, this newspaper revealed that Bank of Ireland was planning to increase the interest rates it charges on personal loans, overdrafts and student loans next month.

And it will increase the interest rates on a number of its credit cards from June 1.

The rate for purchases on the 2in1 card is to rise from 13.9pc to 14.9pc, with the rate for cash withdrawals jumping from 17.4pc to 23.2pc.

On the Clear card, the purchase rate rises from 9.5pc to 10.9pc, with the rate for withdrawing cash on the card jumping from 19.9pc to 23.2pc.

The rate for withdrawing cash on a range of the cards -- including the Gold, Platinum, Twin and Visa cards -- is to go to 23.2pc in June. In some cases, these rates are rising from 16.5pc, -- a rise of 6.7 percentage points.

AIB is to increase the rates for purchases on its Click card from 8.5pc to 9.5pc, from 11.5pc on its Platinum to 12.5pc, and from 14.9pc to 15.4pc on its MasterCard.

The new rates take effect from May 11.

Other credit cards issued by both banks are not affected.

Under-pressure Bank of Ireland admitted it was approving fewer applications for credit cards from customers, in line with other card providers.

A number of card providers have admitted that they are only approving cards for those with pristine credit histories and who have built up equity in their homes.

Halifax's 50,000 card holders need to find new providers by May, as the bank is closing.

Providers of prepaid credit cards are reporting a surge in applications, with one of the main reasons being the rising rejection rate by mainstream credit card providers. There are no credit checks involved in getting a prepaid card.

Kieron Guilfoyle, who heads up prepaid card issuer 3V, said his company had seen a 47pc growth in its business last year as more and more people took out virtual cards instead of physical credit cards.



Proof

He said that six out of 10 applications for new credit cards and from those wanting to switch were being turned down at the moment. This was confirmed by a number of card issuers, although most did not want to go on the record on these figures.

A spokeswoman for Bank of Ireland said it reviewed each credit card application on an individual basis.

"Generally speaking, we look for the following from any applicant: good current account management, proof of permanent employment and, most importantly, an ability to repay any debt," the bank said.

A spokesman for the Irish Banking Federation said his organisation was not surprised to see a reduction in credit card applications being approved.

He said this reflected a reduced capacity of people to meet their repayments, due to the downturn.

Irish Independent

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