In this factsheet we aim to answer your questions on repricing. This is where your
credit card or store card provider changes your interest rate. We believe it’s
important that you understand how repricing works and why your card provider
may do this.
1. Can my credit card or store card interest rate change over time?
2. Why might this happen?
- ‘unsecured’ because it’s not linked to your property; and
- ‘open ended’ because the account is not set to last for a specific length of time.
- changes in the economy;
- the cost of providing credit; and
- their opinion of your financial circumstances.
3. Does a change in an interest rate only apply to my future spending?
4. Do credit card and store card providers change interest rates for the same reasons and in the same way?
-if a provider thinks that you (or a group of similar customers) are more or less likely to be able to pay off the money you have borrowed, it may change your interest rate. This is called ‘risk-based repricing’.
-any other type of repricing is called ‘general repricing’, for example due to a change in the costs of providing credit which may be caused by changes in the economy.
5. For risk-based repricing, how does a credit card or store card provider decide to increase my interest rate?
There isn’t a definite list of things which providers may take into account. However, your card provider is more likely to increaseyour interest rate if you:
- miss a payment or payments on your account (or other accounts);
- start paying off less of your outstanding balance each month;
- increase the overall amount you owe, the number of credit agreements you have, the number of accounts you’ve recently opened and so on; and
- frequently make cash withdrawals on your card, particularly when this is seen alongside other factors (such as those above).
6. How can I reduce the chances of my credit card or store card provider increasing my interest rate in this way?
- make sure you pay your monthly payments on time;
- reduce the amount you owe whenever you can;
- make sure that you keep up with payments on your other types of credit;
- keep within your agreed credit limits; and
- consider closing any accounts you no longer use or need.
7. Are there any rules in place around increases in interest rates?
- if your card provider decides to increase your interest rate, it must give you at least 30 days’ notice.
- you can decide not to accept the new interest rate. If you do this within 60 days, your card provider will close the account and you will need to pay back the money you owe at the current interest rate. If your card provider also offers other lending products, such as personal loans, it may let you transfer the balance on your credit card or store card to one of these, at your current interest rate (or a lower rate).
- card providers will not increase your interest rate within the first year when this is linked to risk-based repricing. This means your interest rate would only increase within the first year because of general repricing.
- other than in exceptional circumstances (for example, where there are sudden changes in the economy) card providers will not increase your interest rate more than once every six months.
- when card providers tell you about an increase in your interest rate, they will explain in clear language how it is changing, what it will cost and the options available to you.
8. Are there any other reasons why my interest rate may change, which are not directly covered by these rules?
The following questions provide some additional information about how your credit card or store card works.
9. What is the annual percentage rate (APR)?
10. How can I find out more about interest rates?
11. How is the interest rate set when I first open my credit card or store card account?
- how you’ve managed credit with them in the past; and
- your overall credit history from credit reference agencies.
12. Will the interest rate on my account vary depending on how I use it?
- when you buy something;
- when you take out cash;
- when you transfer balances from other cards; and
- as part of promotional offers.
The Santander Group includes Alliance & Leicester. We have more than 150 years’ experience in banking and more branches worldwide than any other international bank.