Car Insurers Debate Over Future Profits

UK car insurers have been running an unprofitable business for 14 years. Independent market analysts, Datamonitor, say 2009 looks to be a profitable year despite the doubts

March 13, 2008

Budget Report Expectations

Chancellor Darling's Budget Report is expected to raise taxes on alcohol, fuel emissions, flights and many other issues concerning the economy. Tax burdens expected to increase on poorer families

March 12, 2008

Card Fraud Rises Again

Card fraud has increased over past year. Whilst chip and PIN technology has been successful in the UK, criminal activity overseas has increased 77 per cent

March 12, 2008

Tax Cuts Needed To Restore Confidence

Appeals for corporate tax cuts are submitted to the Treasury as it prepares its Budget report this Wednesday. Business and banking sectors are worried about the direction of the UK economy

March 10, 2008

First Time Buyers Take Hit From Stamp Duty

Stamp duty tax has not kept up with the rate of increase in house price inflation over the past decade. Yet another hurdle first-time buyers must leap over to get on the property ladder

March 10, 2008

Read all Finance News

Riskier Customers Mean More Profit

Following internet bank Egg's recent decision to withdraw credit cards from those customers it deemed as 'high risk', many other banks and credit card companies are now under scrutiny for similar actions.

According to Egg customers who received a letter notifying them of the cancellation of their accounts, many of the 161,000 victims considered themselves as nothing but reliable. Despite claims from the internet bank that it was purely acting out of necessity and reason, there is no valid explanation to support such unfair decision making.

It has now been brought to attention that several other banks and credit card companies are also adapting this 'high risk factor' in an attempt to increase their profits.

The way it works is that customers who pay their credit card balances on time and even in full each and every month are dropped in favour of those who barely manage to make the minimum repayment. This way the amount of interest charged on minimum and late payments accumulates adding to a higher profit margin and richer lender.

But UK payments association APACS strongly denied any such policies were being practiced by credit card providers. It stated that credit card companies have the right to make changes as they see fit stating that they are merely reviewing credit levels to see how they might be 'rationalised'.

A spokesperson from Apacs said, "A credit card company is a business and will either be making sure it is lending money responsibly to people who can afford to repay any money that they're borrowing, or as a business that needs to make a profit, deciding whether it wants to give you a card. At any time it may decide to take that business away."

John McFall, chairman of the Treasury Select Committee, complained that credit card companies were not being transparent. He argued that their methods need to be called into question and said, "We are witnessing a situation where credit card companies are taking cards away from perfectly safe customers who pay their bill in full every month and giving them to customers who are riskier."

APACS has advised all customers to 'shop around' and choose from over 1,000 credit cards available in the UK if they are dissatisfied with their current credit card companies.

Click Here to Compare Credit Card Deals

Published on February 11, 2008

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