Mbna Credit Card Cheques To Become Unavailable
The UK’s largest credit card cheque issuer – MBNA – has announced it will no stop the issuing of cheques to customers from the end of the month.
This comes ahead of a ban on unsolicited credit card cheques that will become law later in this year.
MBNA revealed that its decision was based on consumer demand.
Campaigners are putting pressure on other credit card providers to follow suit and stop the cheques, which usually come with very high interest rates while charging the interest instantly after use.
Credit card cheques are sent out by credit card issuers providing their customers with blank cheques, generally together with a statement, offering them an alternative method of spending on their credit cards.
Once the new government rules come into force, lenders will be able to issue cheques to customers that request them.
Greg Reed, chief marketing officer for Bank of America Europe Card Services, operator of the MBNA brand, has said that orders for cheques will not be accepted after 31 March, but customers will be able to use any they have left after this date.
“While credit card cheques are still valued by many of our customers, we acknowledge that, increasingly, the majority of our customers are choosing to access their accounts by other means,” he said.
The levels of interest charged on credit card cheques is usually significantly higher than the rates charged when making purchases on a credit card, and cheques accumulate interest from the moment the are used, unlike the interest free days offered on most credit cards. Borrowers are also charged a handling fee for their use and there is less protection offered in case things were to go wrong.
These downsides have made them a topic of criticism from consumer groups who believe they are popular with people already facing spiralling debts.
“The announcement from MBNA that it will stop issuing credit card cheques from the end of this month is most welcome and should be followed by the rest of the industry,” said Andrew Hagger of Moneynet.
“One of the big problems has been that people who have been under financial pressure have seen a credit card cheque as an easy way of boosting their bank balance and to buy themselves some breathing space.
“Sending these cheques to people with little financial discipline or willpower was akin to posting bars of chocolate through a school letterbox.”
He added that they were also intercepted by fraudsters who could use them without the credit card owner’s knowledge.
About the Author
UK Price Comparison website Which4U – Compare Credit Cards, Savings Accounts, Fixed Rate Bonds, Bank Accounts, ISAs, Loans, Mortgages, Insurance, TV & Broadband and Gas/Electric bills to find the best UK deals