Unemployed 'targeted by credit card firms'
Confused.com accuses plastic providers of courting jobless applicants
Saturday 18 August 2012
Credit card companies have been accused of deliberately targeting the unemployed, people on low incomes and even those who have had money problems in the past.
Providers are making credit easier to secure but charging ever-higher fees for the privilege, according to price comparison site Confused.com, leading to fears of spiralling, future debt problems among the most vulnerable.
With the number of unemployed in the UK up by 51,000 over the last year to 2.56 million by June, according to figures from the Office for National Statistics (ONS), a study by the aggregator has found that 23 credit cards now accept jobless applicants, compared with just 17 this time last year. Problem credit card debt has been going down recently, but these changes could mean we see debt problems rise in the future," says Una Farrell of debt advice charity the Consumer Credit Counselling Service (CCCS).
Despite the average credit card debt currently standing at £2,089 according to Credit Action, the average annual income required to successfully apply for a credit card is just £9,035, down from £9,718 this time last year. If this trend continues, by next April consumers who don't earn enough to meet the basic tax threshold of £9,205 may still be able to rack up debt on plastic that now costs them more, Confused suggests.
The research also found that representative interest rates have gone up from an average of 18.5 per cent APR in 2011 to 20.5 per cent APR today and that the average balance transfer fee has increased from 2.27 per cent in 2011 to 2.81 per cent this year.
"As credit card providers make more cards available to more people, we are warning consumers of the dangers of debt as it appears to be increasingly easy to obtain yet more expensive to get rid of," says Nerys Lewis, head of credit cards at Confused.com.
But the organisation that represents credit card providers in the UK has rejected the accusations.
Craig Jones, spokesman for The UK Cards Association, says: "Card companies use sophisticated credit scoring techniques to ensure that the right cards are given to the right applicants, with appropriate credit limits based on a comprehensive assessment of their ability to pay. Put simply, it wouldn't be in credit card issuers' interests to grant credit to people who can't afford to repay it. Evidence from the Bank of England also confirms that... credit card spending remains flat and repayment on credit cards remains at historic highs."
The association says about half of all card applications are turned down and 60 per cent of consumers pay off their credit card bills in full each month.
Mark Dampier: How to get an income now that savings are past the 'use by' date
Thousands of UK investors could lose out following collapse of Secured Energy Bonds
Bargain Hunter: Fly off for a winter break in France or Portugal for well under £100
Millions in line for compensation after being sold unnecessary credit card cover
Weekly Money: Round-up of the personal finance stories you may have missed 19-23 January
- 1 Three-year-old boy shoots pregnant mother and father in New Mexico
- 2 Stephen Fry explains what he would say if he was 'confronted by God'
- 4 Gorillaz Phase 4: Cartoon supergroup is back as new artwork is unveiled
Stephen Fry explains what he would say if he was 'confronted by God'
9 reasons Greece's experiment with the radical left is doomed to failure
The open loathing between Barack Obama and Benjamin Netanyahu just got worse
Have we reached 'peak food'? Shortages loom as global production rates slow
President Putin is a dangerous psychopath - reason is not going to work with him
British grandmother Lindsay Sandiford faces execution by firing squad in Indonesia
iJobs Money & Business
£40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...
£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...
£13000 per annum: Recruitment Genius: This Pension Specialist was established ...
£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...
Day In a Page
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion