Internet Bank, Intelligent Finance (IF), standalone subsidiary of Halifax Bank of Scotland (HBOS) has notified its 70, 000 credit card customers of frosty options. They could shift to another Intelligent Finance Card, find a different provider or pay outstanding balances within a span of a month.
This decision is based on the fact that these offset cards uses a separate system and the cost of making its chip and PIN complaint is exorbitant. Hence, infrastructure up gradation is a highly costly affair.
Besides, the officials of the bank states that it is economically not feasible to upgrade as only 10 % of the customers use the offset functions.
"It was going to cost a lot to do the conversion [on] the IT platform," was told to silicon.com by an IF spokesperson.
With over 100 million chip and PIN cards being issued to 38 million cardholders in UK since the year 2003, almost 70 PIN- verified transactions taking placing every second, this move has infuriated the customers who were making utmost use of the “offset” feature.
The offset card enabled the customer equalize their credit-card debts with their savings and pay interest only for the balance. This meant that if one had savings of £1,000 and debts amounting to £2,000, one would have to pay interests on only half the debt.
The root cause of the rage and anger is that the Halifax card does not provide this facility, leaving the already irate customers either pay 12.9% on their balance or opt for a new 0% card.
Managing Director of IF, Nick Robinson said “It has become uneconomical for small card players like ourselves to operate their own IT systems," "There are massive economies of scale and things like Chip and Pin have served to accelerate that."
The banks have been discussing about the introduction of the chip and PIN since the mid 1990s though IF was launched in the year 2000 but no concrete steps were taken.
In the earlier arrangement, IF customers were entitled to offset savings against credit cards, mortgages and personal loans. But now it is limited to just home loans.
The Managing Director further adds, “Consumers choose personal loans according to the best rate, and we can no longer offer a competitive rate as well as an offset facility. If you already have a personal loan with us, however, you will be able to continue to offset until you have cleared the debt.”
Customers have their justifications and so does the bank but the indelible prints of such services in the minds of IF’s clients is inevitable.
A 30-year-old lawyer from London, Clayton said, “My husband and I both have IF accounts and maintain healthy enough balances on our current and savings accounts to offset our credit-card balances. However, we have recently been told that we will no longer have the right to offset balances and will have to pay 12.9% on our debts — all because of chip and pin. Frankly, IF should have spotted this when it launched the service.”
Posted
on : Fri, 17 Jun 2005 06:40 GMT | Credit Cards News
By : Pippa Fielding
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