Credit card & store card PPI – moneyfacts.co.uk calls for providers to treat customers fairly and quote for cost per £100 of benefit
Andrew Hagger: Head of News and Press at moneyfacts.co.uk comments:
“PPI is a subject rarely out of the personal finance news these days, but let’s hope that the long overdue decision by the OFT to refer the matter to the Competition Commission signals some much needed light at the end of the tunnel for UK consumers.
“Whilst it is comforting to see the FSA at long last showing its teeth by fining the likes of GE Capital Bank, Loans.co.uk, Redcats and most recently Capital One Bank (Europe) Plc, there are still fundamental issues to be addressed when it comes to transparency of information available for consumers.
“An area that Moneyfacts.co.uk feels has been somewhat overlooked in the furore of discussions surrounding overpriced products, inflexible single premium policies and general sales techniques surrounding PPI is the manner in which credit card and store card PPI is advertised.
“Card providers will all quote a sum per £100 of balance outstanding on your account, ranging from 59p to £1.50 (for some store cards) per £100. However although this is the method by which the monthly PPI premium is calculated, the actual benefit you receive by taking out this cover can vary dramatically between the various lenders. Whilst some will pay out 10% of your outstanding balance, others who on the face of it appear to be charging a similar level of premium will only pay out 3% or less of your statement balance.
The table below highlights the variances and shows that the true cost of £100 of monthly benefit bears no relation to the actual charge per £100 advertised by the credit card providers.
“Moneyfacts.co.uk recognises that, in the current financial climate where we are witnessing record levels of indebtedness, card related PPI could provide an invaluable safety net for those people whose finances are balanced on a knife edge. Therefore Moneyfacts has today asked the Competition Commission to consider a request that premiums should be quoted for the level of benefit received as part of its wider PPI review.
“The OFT has stated that it is looking for more innovation within the market, and Paymentcare.co.uk seems to have come up with a proposition that could help those with a number of credit/store cards, or for those that regularly jump from one deal to another.
“The Paymentcare dedicated credit/ store card policy allows you to purchase cover at a competitive price to cover all the plastic in your purse or wallet (up to a maximum £10,000). By having one policy, it means that any claim process will be much simpler, with only one set of paperwork to complete.
“Another benefit of a single standalone policy is that the qualification date concerning pre-existing conditions remains fixed, rather than starting from scratch each time a new card and associated policy is taken out.”
Shane Craig, managing director of Paymentcare.co.uk said: “Our policy provides card holders real advantages, with comprehensive cover and great cost savings on two levels. It’s the UK’s lowest cost PPI cover for cards and insurance premiums are refunded during a claims period - unlike the credit card providers.”
Card provider/Insurer |
Monthly cost for £1000 card balance |
Monthly payout |
Equivalent cost per £100 of monthly benefit |
Paymentcare.co.uk |
£6.50 |
£100 |
£6.50 |
Goldfish |
£8.90 |
£100 |
£8.90 |
MBNA |
£7.90 |
£50 (5%) |
£15.80 |
Bank of Ireland |
£5.90 |
£25 |
£23.60 |
Morgan Stanley |
£7.60 |
£30 (3%) |
£25.30 |
Research by Moneyfacts.co.uk 19.02.2007
NOTES TO EDITORS:
Moneyfacts Group
Moneyfacts is the UK’s leading independent provider of personal financial information and our data is used and trusted throughout the financial industry.
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