Credit Card “Personal Pricing” Becomes More Widespread
Published: 22 April 2010 By MoneyHighStreet Staff Leave a Comment
The personal pricing of credit cards in on the rise, according to the latest findings from Banking Specialist Defaqto.
Personal pricing is becoming increasingly used by credit card companies to tailor the interest rates they charge to the individual circumstances of each customer.
Details such as an applicants credit report and repayments history are taken into account by credit card card companies to calculate individual charges, however the research by Defaqto has also revealed a large increase in the number of rejected credit card appllications.
There was a 48% rejection rate for credit card applicants between January and October 2009 which was up by 6% form the same period in 2008, according to the research.
Personal pricing makes it hard for consumers to compare interest rates between different card companies as only two thirds of successful applicants will actually receive the best rates and most credit card summary boxes only show the typical APR without displaying the highest rates that may be offered to the customer.
Companies that do display the highest interest rates under their personal charging scheme include Egg, Halifax, M&S Money and HSBC.
Commenting on the rapid increase in credit card rejections found by the Defaqto research, Anthony Ball, Head of Finance at Money extra.Com said:
“Defaqto are correct to highlight that the number of rejections in credit card applications has rocketed recently, especially as it has now reached a staggering six million, a figure up six per cent from 2008. Their ‘Star Rating’ system allows for customers to judge which card will suit them best based on card features; but this becomes irrelevant if customers are applying to cards beyond their reach, marring their credit history and making it more difficult to get approved for the best card in the future.”