Barclaycard ‘the only winner’ from helping-hand scheme

| August 12, 2009 | 1 Comment
Barclaycard 'the only winner' from helping-hand scheme

Barclaycard’s claim to be lending a helping hand to customers in financial difficulties are little more than a sham to boost the company’s coffers, a financial expert has claimed.

The credit card provider has launched a new advice line targeting customers who are close to their credit limit or who are failing to clear their debts each month.

Customers will be sent a text or telephoned by the firm and invited to discuss their situation.

Barclaycard said it will offer free debt advice and the option to reduce minimum payments.

However, financial journalist Tricia Phillips, of Your Money Questions Answered, said: “The only winners from the scheme will be Barclaycard, as this is simply a way of reducing their exposure to bad debts.”

She also pointed out that reducing minimum payments will simply increase the time it takes for customers to clear their balance - increasing the overall interest paid and driving up Barclaycard’s profits.

Barclaycard also announced interest rate hikes for the customers it identifies as most high risk.

“In the second half of the year, there will be a limited number of price rises where we have a clear indication that potential risks have increased,” said Antony Jenkins, chief executive.

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  1. Andrew Bond says:

    From the Barclaycard Press Office

    Our announcement that the interest rate freeze announced in January and which formed part of a package of measures to give customers breathing space has expired has – understandably – been met with some cynicism. We wanted to make sure that we have explained the situation fully so that you can make your own mind up.

    In January Barclaycard became the only UK card provider to help customers feeling the pinch by announcing a price freeze for six months.

    That freeze has now ended and we will again use risk-based pricing, which is employed by every single credit card company in the UK.

    Risk-based pricing is used instead of flat rates by all credit card companies to ensure that competitive rates can be offered across the board, and according to the circumstances of each customer.

    This doesn’t mean all Barclaycard customers will see an increase in their interest rate – in fact, the vast majority will stay the same, and three million customers will see a reduction this year. A few customers – whose risk profile has changed – may see their interest rate increase, but those people will be able to speak to Barclaycard to talk about their circumstances.

    What risk-pricing means to Barclaycard is that we treat every customer on a case-by-case basis, and that we will continue to offer help to customers who are struggling – they will be put in touch with Barclaycard’s experienced debt advisers, and where necessary practical help will be offered. That might mean reducing the minimum payments for a while to provide extra breathing space or advising customers where they can turn for help if they are concerned about their total borrowing.

    Despite what you might believe, we really do care about our customers and already this year we have helped about 11,500 people who have been experiencing difficulty because of the recession.

    We understand why people are worried that their interest rate might go up, but that is not something that will affect the overwhelming majority of our customers.

    We would urge any of customers who are worried about their Barclaycard accounts in anyway to get in touch so that we can make sure any help that might be needed is made available.

    Call us on 0844 241 2929 to find out more or to get some help.

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