Virgin raises credit card rates


Virgin Money has raised interest rates on its credit cards by almost 50% in a further blow to borrowers faced by recent mortgage rate hikes.

Rates on purchases using Virgin credit cards have risen from 16.8% to 24.9% for some customers, while balance transfer rates have increased from 18.9% to 27.9%.

Thousands of selected Virgin Money customers have been earmarked for the increases following a review of the lender's database and they were written to last week and told they can either accept the rises or they will need to pay off their balances.

Sir Richard Branson's Virgin Money, which recently bought Northern Rock, said the rises reflected "responsible" lending and were part of a regular review taking customers' performances and external risks into account.

Virgin Money has around 2.5 million credit card customers and less than 1% of them are understood to be affected, the equivalent of fewer than 25,000 people.

Sir Richard vowed to improve British banking for customers and shake up the industry with "simple, fair and transparent" deals after nationalised Northern Rock was taken over in a £747 million deal.

Customers have been given 30 days notice of the rises and they have 60 days to tell Virgin Money if they do not accept them.

Lenders have been offering some of their cheapest ever deals as the Bank of England maintains the base rate at a 0.5% low, but analysts expect them to tighten up on borrowing this year amid the weak economy and the fallout from the eurozone crisis, meaning more lenders could follow Virgin Money's example.

Despite three years of rock bottom interest rates, Saga found last week that the typical credit card APR has been rising, from 15.73% in 2008 to 17.32%.

Virgin Money's move follows a spate of lenders including Halifax, RBS-NatWest and Clydesdale and Yorkshire Banks announcing mortgage rate rises, affecting more than a million people, blaming the increased cost of funding mortgages.

Kevin Mountford, head of banking at said: "Rates on credit cards have been rising over time."

He said some lenders have been "repricing" customers in this way for a number of years to help them "balance the books".

Mr Mountford said: "From a customer point of view they are able to reject it. You will no longer be able to use the card but you will be able to pay down the balance using the old rate over time.

"We're in a low base rate environment, banks don't have flexibility on where they can make their money. They are looking at other ways to make up the revenue loss."

A Virgin Money spokeswoman said: "We periodically review credit risk across our portfolio and will change interest rates - up or down - based on those reviews.

"These reviews take into account a customer's performance with us as well as a range of external credit risk factors.

"If we raise a customers' rate based on risk, we are doing so because we feel it is the responsible thing to do."

She said customers were notified in advance and they can reject the new rate and pay off the outstanding balance at the existing rate, in accordance with industry principles.

But one Virgin Money customer told the Daily Telegraph: "Mr Branson has clearly lost his touch with consumers."


A 'Sir Alex Feguson' tattoo

Arts and Entertainment
Liam Neeson said he wouldn't

Liam Neeson's Downton dreams

voicesApple continually kill off smaller app developers, and that's no good for anyone
On the last day of campaigning before the polling booths open, the SNP leader has written to voters in a final attempt to convince them to vote for independence
voicesIs a huge gamble on oil keeping the First Minister up at night?
Arts and Entertainment
Ben Whishaw is replacing Colin Firth as the voice of Paddington Bear

Thriller is set in the secret world of British espionage

Life and Style

ScienceGallery: Otherwise known as 'the best damn photos of space you'll see till 2015'
travelWhy Japan's love hotels are thriving through an economic downturn
Life and Style

Bomber jacket worn by Mary Berry sells out within an hour

Life and Style
Alexander McQueen A/W 2014
fashionPolitics aside, tartan is on-trend again this season
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Rapper Jay Z performs on the Pyramid Stage at Glastonbury in 2008
musicSinger sued over use of the single-syllable sample in 'Run This Town'
Joel jumps over the board...and into a giant hole
footballFrom joy to despair in a matter of seconds
Arts and Entertainment
Pointless host Alexander Armstrong will voice Danger Mouse on CBBC

Much-loved cartoon character returns - without Sir David Jason

Arts and Entertainment
Meera Syal was a member of the team that created Goodness Gracious Me

Actress to appear in second series of the hugely popular crime drama

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Audit Manager Central Functions

To £85,000 + banking benefits: Saxton Leigh: You will be expected to carry out...

Credit Risk Audit Manager

Up to £90,000 + benefits: Saxton Leigh: Credit Risk Audit Manager required to ...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week