Free advice line 0800 014 7863
Credit card companies have been criticised for increasing interest rates at a time when consumers are suffering under the weight of recession. The Financial
Ombudsman Service, who received scores of complaints over the past year, reported that virtually all complaints were upheld resulting in compensation for the customer.
Numerous credit card providers such as the Nationwide building society and the online bank Egg increased interest rates on some individuals by as much as 10%. The FOS are reported to have received more than 18,000 complaints over credit cards alone in the year to the end of March. Of this amount, 75% of complaints were upheld.
Yet for complaints pertaining to interest rate hikes in particular, almost all cases were upheld resulting in credit cards paying their customers compensation.
In their investigation into credit card interest rate increases, the FOS asked providers to complete a questionnaire outlining how the risk assessment was conducted and their reasons for imposing tougher lending costs.
“Almost all the credit card companies subsequently chose to settle the complaints that had been brought against them, rather than have our investigation continue,” the FOS said.
This year, Egg raised its rates by an average of 4.39 percentage points. Some customers saw their rates rocket from 16.9% to 21.9%, while Nationwide lifted its rates by as much as 2 points to 19.9% two weeks ago.
Complaints about credit cards have surged in recent years. The Financial Ombudsman Service reported a 30% jump in disputes this year, an increase of 14,000 in 2007-8. A figure all the more striking when compared to the mere 2,650 complaints averaged over the previous four years.
