First Direct to make huge change within weeks affecting customers with debt
First Direct to make huge change within weeks affecting customers with debt
Share:
First Direct will be hiking the interest rates on its credit card products within weeks. HSBC's sister bank will increase the interest rates offered on credit card purchases, balance transfers, and money transfers from April - with the annual percentage rate (APR) going from 19.9% to 24.9%. On every £100 owed, this hike will add an extra 35p each month.
However, cash transactions will see a slightly larger increase. The APR charged for those making cash or cash-related payments, including withdrawals, will rise from 24.7% to 29.7%. This will add an extra 33p per month for every £100 you owe. The changes will not impact you if you pay off your full balance each month, and according to First Direct, customers will continue to get up to 56 days of interest-free credit on their purchases. If you are in an interest-free period, then you will not be affected by the changes until your deal expires. The online bank says customers who are not happy with the changes can close their accounts without penalty before April 11. However, they must repay their existing balance at the current rate before the account can be closed. After April 11, the new rates will apply.
First Direct has not confirmed the reason behind the hike in borrowing costs for customers and the move comes as the Bank of England is poised to cut its base interest rate next week. The Central Bank has cut its base rate twice since August last year, and 60% of economists polled by Reuters believe the Bank could cut rates four times by the end of the year. This could potentail taking the rate from the current 4.75% to 3.75%.
