Credit card companies back down on charges
Consumers who have complained about increased credit card interest rates have won compensation in almost all cases over the past year, The Sunday Times can reveal.
A string of providers — including Nationwide building society and online bank Egg — have increased rates charged to customers as the recession bites, in some cases by as much as 10%.
The Financial Ombudsman Service received more than 18,000 complaints over credit cards in the year to the end of March, 75% of which it upheld, its annual review will show this week.
However, the success rate for those complaining about increases to interest rates is even higher — with lenders backing down in “almost all” cases, said the FOS.
As part of its investigation, the ombudsman sent questionnaires to the credit card companies under scrutiny, asking for information about the risk assessments that had led to higher rates, and how these new rates had been calculated.
“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 rate soar from 16.9% to 21.9%, while Nationwide lifted its rates by as much as 2 points to 19.9% two weeks ago.
Last week, Barclays announced plans to increase its overdraft rates — by up to 3 points from June 8 — despite the Bank rate being on hold.
Complaints about credit cards have surged in recent years.
The FOS saw a near-30% jump in disputes this year, up from 14,000 in 2007-8. In the previous four years, complaints averaged just 2,650 — almost 600% lower than the figure for this year
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