MBNA to stop issuing credit card cheques
Posted on Wednesday, March 24, 2010
After March 31, MBNA will not be issuing any more credit card cheques to their clients. Reason: Negative response from customers. Yes, MBNA has resorted to this act only after gauging a weak response to the instrument in recent times. The organisation clearly stated that it is doing so in response to customer feedback. According to market experts & consumer groups, the concept of credit card cheques landed into the controversy owing to the exorbitant interest rates that their providers charged from customers. Interestingly, interest rate charged in some cases surpassed that of credit cards. This is excluding the teaser rates cheques which carry zero percent interest rate on their head. The case came into light when it was observed that many people are opting for this instrument to get rid of their credit card debts. Little did they knew that right from the outset they will be charged on the money spent, courtesy credit card cheques whereas in normal credit card products case there is an interest-free period to repay the debt. Thus, making life more difficult for the customers. Plus, with the inception of unsolicited cheques, commoners became exposed to higher degree of risk, in the form of a genuine fraud. Since, most of them (customers) hardly had any knowledge about when these cheques are being sent to them and if they know, it becomes impossible for them to keep the track of expenses and charges until they receive their credit card statement. Until now, the move has won favourable response from industrial players and circumstances suggest that the trend is likely to be followed by others too. Incidentally, recently, government unravelled a new series of measures that promised to cut down the cost of credit card borrowing by approximately £300 million on yearly basis. Meanwhile, the legal prohibition of the issuance will come later this year when the Financial Services Bill will come in force for lenders. Still, for clients who request them to do so, will be issued cheques by them.
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