Halifax launches Classic Visa as “non-standard” consumers increase
by Gill Montia
Story link: Halifax launches Classic Visa as “non-standard” consumers increase
Credit card customers with poor credit histories are likely to be facing punitive interest rates in the future.
Halifax has recently launched its Classic Visa credit card charging an APR of 27.9%.
It is aimed at consumers with a low credit score and this includes people who are too young to have accrued a credit history, those on low incomes and in rented accommodation, plus the recently divorced.
The bank’s cheapest credit card charges interest at 8.9% and the launch of Classic Visa could be a sign that increasing numbers of consumers will only have access to credit cards and loan products that charge high rates.
Richard Mason from Moneysupermarket.com, the price-comparison web site, remarks that: “There is a tightening of credit scoring going on in reaction to the credit crunch … the number of people considered prime by lenders may be falling.”
A trend is emerging whereby those with a borderline credit history, who would have been accepted for mainstream products in the past, are now being rejected.
Halifax maintains that its Classic Visa is for a “niche” market only: people with little or no credit history. Credit limits on the card will range from £500 to £2,000.
Barclaycard and Capital One both provide credit cards for “non-standard” customers: Barclaycard Initial charges 27.9% and the Capital One Classic, 34.9%.
The launch of the Halifax Classic Via coincided with a report from financial website, MoneyExpert.com, which confirmed that the costs of unsecured personal loans are rising steeply.
The average interest rate on an unsecured loan of £5,000 is now close to 9.5% and a number of lenders, including Liverpool Victoria, GE Money and Leeds Building Society have recently withdrawn from the market.
