Poor credit history? Late payers now facing extra charges on credit cards
Customers with poor credit histories will be charged more than people who have always paid their bills promptly, as "personalised pricing" is introduced in Ireland for the first time.
Provider Avantcard is introducing the tiered interest rates, the first personalised pricing for any form of consumer borrowing in this country. It is likely to spur other card providers to follow its lead.
Leitrim-based Avantcard, which used to be called MBNA, said there would be three 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.
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 a "great" credit profile will get a 20.9pc rate. These are people who settle their card bill on time, and save each month.
Avantcard is pushing hard for new business by offering 0pc on purchases for three months 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 Ó Súilleabháin said personalised pricing "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".
Avantcard managing director Chris Paul insisted the new approach increases transparency, rather than pitting people with good credit histories against those with poor records.
"We believe this new approach to product pricing increases transparency, which will further build customer confidence and trust in Avantcard as their preferred provider of loans and credit cards."
But Dermott Jewell, of the Consumers' Association, questioned whether card holders would benefit from new incentives for them to take on debt.
"It remains a fact of financial prudence that no consumer should have access to a credit card unless they have the means to clear the balance without penalty, and especially when the penalties are calculated at outrageously high percentages," he said.