Thousands to be hit by big hike in credit card interest rate
Thousands of credit card customers face paying more after one of the largest operators in the market said it was hiking its interest rates by almost a third.
AvantCard, which used to be MBNA, is pushing up the rates it charges on purchases from 17.9pc to 22.9pc for a number of its customers. This is an increase of 28pc, and comes just two years after a similar-sized rise.
The higher costs will take effect over the next two months, letters sent by the company indicate.
Interest charged on balance transfers, and cheque and money transfers will also rise by the same percentage.
Spanish-based AvantCard took over MBNA's Irish card operations in 2012. In the letter to customers, the card provider said it periodically reviewed the interest rates it charged, based on the current economic conditions.
"We have recently undertaken a review and confirm that we will be making changes to increase the standard variable interest rates applicable to your account no earlier than two months from the date of this letter," it said.
The letter added that those who did not want to accept the new, higher rates should pay off the balance owed and close their account within two months.
AvantCard customer Liam Ferguson, who received one of the letters, said there was no justification for such a steep increase.
Mr Ferguson, who is a financial adviser at Ferguson and Associates in Meath, said: "I am aware you pay a premium for the flexibility of a credit card. But I can see no justification for adding five percentage points when European Central Bank rates are so low."
A spokeswoman for AvantCard said it periodically reviewed interest rates. The company declined to say which cards and how many customers would be affected by the change.
"In this instance, AvantCard has written to a number of customers, giving notice of its intention to increase the interest rates on their cards. Only some customers will see a rate increase - the majority of AvantCard's customers will be unaffected by this change."
The card provider has not been taking on new customers since it was taken over by AvantCard.
"Our primary focus is looking after existing customers," the spokeswoman said.
In 2013, the Central Bank said it was working with Spanish regulators to end disruption to thousands of credit card holders with the AvantCard, caused by an IT changeover when the company was sold. Customers were unable to access their accounts online, change direct debit details, register new cards and had transactions refused.