Barclaycard is to freeze its credit card interest rates for at least four months.
The credit card giant said it would not impose price rises on customers under its risk-based pricing system, which sees people who are considered to be high risk charged higher interest rates, until at least June 2009, even if their risk profile changed.
Help for struggling customers
Barclaycard also announced new initiatives to help people who get into financial difficulties, including the launch of a new advice helpline for customers who are concerned about their financial situation.
The company plans to contact customers who look like they are heading for problems to offer advice before they miss a payment.
It will also reduce the credit limits of borrowers showing signs of financial stress, as it believes it is not in people’s long-term interests to borrow more money when they get into difficulties.
The group has committed not to contact customers who miss payments for up to two months if they are working with a money advice group to sort out their financial problems.
Rate cuts for low-risk credit card customers
Barclaycard, which has 11.9 million customers, is also reducing the interest rate charged on purchases for at least three million of its customers with low-risk profiles, cutting them by between 2.5% and 5% over the course of the year.
Martyn Saville, credit card expert at Which? said, ‘We welcome this first step towards realistic interest rates on credit cards – this is hopefully a sign that credit card companies are finally re-entering the real world with the APR they charge their credit card customers.’
‘The Barclaycard Simplicity Visa card has been a for everyday use for months and Barclaycard‘s new move is to be welcomed. We hope that other providers will follow suit and that Barclaycard will cut its rates yet further to help embattled consumers. With the Bank of England base rate now at just 1%, there is still a very long way to go.’
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© Press Association 2009
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