Monday 23 September 2019

Avantcard to charge interest that depends on your credit rating

Charlie Weston

Charlie Weston

CREDIT card provider Avantcard is to introduce tiered interest rates, with those with poor credit histories being charged more than people who pay their bills promptly.

It is the first time so-called personalised pricing has been introduced in this market for any form of consumer borrowing, and the move may spur other card providers to follow its lead.

Leitrim-based Avantcard, which used to be called MBNA, said there will be three credit card rates based on customers’ credit profiles – great, good and ok.

The Carrick-on-Shannon company offers the Mastercard credit card, but has some of the highest interest rates in the market, with 22.9pc charged for making purchases on its card.

The new individualised pricing will also apply for those taking out a personal loan with AvantCard, with the amount to be borrowed also to be a factor in the interest rate charged.

Customers rate themselves, and this is then cross-checked by the card provider with the Irish Credit Bureau (ICB).

Those confirmed as having a “good or ok” risk profile will get a 22.9pc annual percentage rate (APR) on card purchases.

Those regarded as having “great” credit profile will get a 20.9pc credit card rate.

Avantcard is pushing hard for new business by offering 0pc on purchases for three month on all new credit cards. There is also 0pc on balance transfers for six months, and 0pc charged on money transfers for nine months.

People borrowing between €10,000 and €20,000 will be charged interest rates of between 8.9pc APR and 11.9pc, depending on their credit record.

Head of credit risk for Avantcard Tadhg O’Suilleabhain, said personalised pricing was designed to allow customers to access credit at the lowest suitable rate for them, based on their individual financial and credit profile.

“It rewards customers who have a better credit profile with lower rates, and opens the door to those who may find themselves declined by other lenders, to avail of credit at interest rates that are still competitive.”

And Avantcard managing director Chris Paul insisted the new approach increases transparency, rather than pitting people with good credit histories against those with poor records of paying back debt.

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