Cry baby Richard Branson is also a hoodwink thief as he rips off Virgin Money Credit Card Holders using 50% hikes
Richard Branson’s Virgin Money hikes credit card interest rates for 25,000 customers by 50%
Only existing borrowers hit – new arrivals offered the ‘old’ rate
By Rob Cooper and Tom Gardner
PUBLISHED: 14:01, 13 March 2012 | UPDATED: 14:50, 13 March 2012
Richard Branson’s Virgin Money have hiked credit card interest rates by 50 per cent in a fresh blow for customers.
The rise comes after several mortgage lenders increased their rates to the fury of homeowners – despite a record low Bank of England rate.
Virgin Money, who recently bought Northern Rock, has quietly hit around 25,000 existing customers with soaring repayments.
Cardholders have received letters in recent weeks telling them that interest rates on purchases have increased from 16.8 per cent to 24.9 per cent.
Balance transfer rates have also gone up from 18.9 per cent to 27.9 per cent.
However, anyone applying for a new credit card will still receive the ‘old’ more generous terms.
A spokesman for Virgin Money insisted not all of its 2.5million customers have been affected by the increases and the company was merely following industry practice.
He said: ‘We periodically review credit risk across our portfolio and will change interest rates – up or down – based on those reviews.
‘The reviews take into account a customer’s performance with us as well as a range of external credit risk indicators.
‘If we raise a customer’s rate based on risk, we notify them in advance and they can reject the new rate and pay off the outstanding balance at the existing rate.
‘This is in accordance with the BIS industry principles, which we fully adhere to.
‘This only affects a small proportion of customers – less than 1 per cent of the book.
‘This is an industry practice, it is not unique, in which we are realigning a portion of our portfolio that is priced below what we consider is prudent in the current market or a customer’s individual circumstances.’
Sir Richard Branson last year acquired the ‘good’ bits of Northern Rock to add to his banking empire – its 75 branches, one million customers, £14billion of mortgages and £16billion of savings.
But the taxpayer remains liable for the ‘bad’, indebted parts of the bank kept afloat solely by a £21billion bailout.
Today Sir Richard was accused of losing touch with his two million customers after bringing in the credit card rate rises.
Andrew Hagger, spokesman for moneynet.co.uk, said: ‘The rates advertised on price comparison sites for new customers at Virgin Money are still 16.8 per cent.
‘But a number of people have said that there existing rate is being increased to 24.9 per cent.
‘Companies have done this in the past, usually if someone has missed a couple of payments. This only comes to light when people complain and get in touch with journalists.’
Customers have been given 30 days notice of the rises and they have 60 days to tell Virgin Money if they do not accept them.
Tara Evans, who writes for thisismoney.co.uk said: ‘If you receive a letter informing you that your interest rate is going to increase then you can phone Virgin Money to reject it.
‘This means that your rate will stick at your current level until you’ve paid the balance off and after this you will have to close the account or accept the higher rate.
‘You also won’t be able to continue spending on the card or your rate will automatically increase to the new one.
‘If you’re using the credit card for purchases or a balance transfer then you may need to think about switching to a cheaper rate.’
One told the Daily Telegraph: ‘The sheep’s clothing is gone. They have shown they are as greedy as the bankers who cannot by award themselves arbitrary and outrageous increases and bonuses regardless of the circumstances.’
The Bank of England announced this month that interest rates would again be help at 0.5%
Lenders have been offering some of their cheapest ever deals as the Bank of England maintains the base rate at a 0.5 per cent low.
But analysts expect them to tighten up on borrowing this year amid the weak economy and the fallout from the eurozone crisis, meaning more lenders could follow Virgin Money’s example.
Despite three years of rock bottom interest rates, Saga found last week that the typical credit card APR has been rising, from 15.73 per cent in 2008 to 17.32 per cent.
Clare Francis from Moneysupermarket.com said: ‘I wouldn’t be surprised if other lenders followed suit. Credit card providers are routinely reviewing their books and looking at customers.
‘The average credit card APR has gone up from 16.2 per cent in February last year to 17.32 per cent this month.’
This is yet more bad news for borrowers with a number of High Street lenders announcing they were upping their rates.
RBS-NatWest said it was increasing rates on two of its products by 0.25 per cent, taking them to a rate of 4 per cent, hitting some 200,000 customers.
Halifax then announced that 850,000 borrowers would see their standard variable rates increase from 3.5 per cent to 3.99 per cent from May 1,
The Bank of Ireland has also said that it was hiking its rates, affecting 100,000 customers in the UK. It will raise the SVR on its mortgages to 4.49 per cent from 2.99 per cent in two stages.
Clydesdale and Yorkshire Banks also announced monthly payments hikes.
In a combined move that will hit 30,000 customers, the pair will increase their standard variable rates from an already relatively high 4.59 per cent to 4.95 per cent from May 1.