Almost all the credit card companies today are making their profits through back door – thanks to fierce competition in the plastic money market. And this is imminent by the fact that even financial institutions like Nationwide, supposed to have one of the fairest credit cards, have reduced its interest-free period from 56 days to 46 days.
By doing so, the credit card users will now have to post their cheques immediately after receiving the statement so that the bill is cleared in time and no penalties are slapped. Nationwide has also slashed its cash reward by half to 0.25 per cent on spending, while interest rate have been hiked by 1 percentage point to 18.9 per cent.
Cahoot, Cooperative Bank and Smile are some other financial institutions that offer 46 days interest free card. Egg and HSBC's Classic Plus allows only 45 days interest free card, while the average is 56 days.
The financial institutions also trap unwary customers by mentioning that it takes several days to clear payments.
For instance, Goldfish takes ten working days for cheques to clear, but it might even take two weeks if there is a bank holiday in between. Paying cash also doesn’t help as it takes at least five working days for the payment to clear.
Nationwide takes seven working days for cheques/cash to be processed. Egg takes anywhere between seven to ten working days for a cheque to clear and seven days for electronic transfer. But there are some banks like NatWest and Barclaycard that take two to three working days for clearing all types of payment.
Meanwhile, the Office of Fair Trading has started investigation against excessive penalty charges, such as late-payment and over-limit fees, after consumer watchdog Which? said that penalty charges bring banks about £4bn a year.
Posted
on : Mon, 14 Mar 2005 00:00 GMT | Credit Cards News
By : Rob Davis
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