Credit Card Overview
Fact: there are more credit cards than people in Britain and the country's debt problems are amongst the worst in the world.
When choosing a card provider, its policies on responsible lending and debt advice provision are of key importance. The green and ethical concerns you bring to who you bank with, concerns about equal opportunities or the environment, are just as applicable to who you get your credit card from.
This section also looks at the green or ethical worth, as well as the practicalities of charity affinity cards.
Does your credit card provider treat its customers responsibly?
What are charity affinity cards and how do they work?
Does your credit card provider treat its customers responsibly?
Responsible lending
According to the British Banker's Association (BBA), responsible lending means 'providing credit, based on background checks and professional judgement, to people who can accommodate repayments without getting into financial difficulty'. As the sheer number of people in debt today shows, these principles are not always well applied by credit lending institutions. In 2008 our credit card debt hit £54.4bn and continues to rise.
Transparency is key - credit card customers should be presented with the terms and conditions attached to their card up front and in plain English. It is important to check whether your provider has a responsible lending policy in place, and how it is implemented if it does exist.
Debt management
Credit card debt is all too common in the UK. Some financial institutions offer basic in-house debt advice services, the scope of which can vary greatly. Often providers will refer customers to free advice services including the Consumer Credit Counselling Service, the Citizens Advice Bureau and others.
Use our search tool to find details of your provider's debt management services. Information on this subject can be found under 'Responsibility toward Customers'. Alternatively contact your provider directly for further information.
What are charity affinity cards and how do they work?
Affinity card providers make a small donation on behalf of the card holder to the charity it is associated with.
Such charity donations average around 25p per £100 spent. So, in order to donate £100 to your charity of choice you'd have to spend £40,000 with the card. Most providers also make a one-off donation of between £5 and £25 on each new card account.
In their analysis of charity affinity cards moneysavingexpert.com suggest that a more effective way to donate money is to use cash back cards. Cash back cards operate in much the same way as affinity cards except that instead of a charity, additional money goes to the card holder and this money is usually considerably more than a standard charity card donation. The cash back card holder can then donate the money they have earned to the charity of their choice and if eligible, Gift Aid it, so rather than £1 the charity will receive £1.28. Donations on affinity cards are not eligible for Gift Aid.
View the range of charity affinity cards available on the market click here.
Your next steps
See our guide Next Steps - Credit Cards for more suggestions on how to find out about your credit card provider's green and ethical policies, how to contact them and how to find the right credit card for you.
Credit Card Search
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Credit Card Provider
Bank of Ireland (UK)
Green/Ethical Products
- Basic Bank Account
- Alburaq product range (Shariah)
- Giraffe Carbon Offset mortgage (online product)
Ethical Lending or Insurance
No evidence of a policy found. The Alburaq product range does apply principles of Shariah law, however.
Responsible Lending
1. Credit Lending
Bank of Ireland offers a standard 90% LTV (loan-to-value) rate for house purchase/re-mortgage. This compares favourably with the FSA’s recent Turner Review which suggests that LTV (loan-to-value) rates be set at 90%, i.e. that borrowers should have at least a 10% deposit for a mortgage. The bank offers 92% LTV for first time buyers.
The bank also offers a 4.5 times LTI (loan-to-income) rate to single borrowers, 4 times for joint borrowers (or 4.5 plus 1) while the Turner Review suggests just 3.5 times.
In terms of running credit checks, the bank states that it does an assessment to determine how much customers can afford to borrow and the most appropriate type of borrowing. It looks at income and financial commitments and the customer’s financial history as well as information from credit reference agencies and a ‘credit score’. The credit score works out the risk of defaulting on repayments. It also takes into consideration what security the customer can provide.
No policy was found related to the avoidance of unrequested increases in credit limits.
2. Debt Warning
The bank requires customers to read its ‘Personal Banking Guide’ before buying a product – this includes details of credit checks, warns about careful budgeting and recommends payment protection plans to help against unforeseen financial difficulties.
Customers in Northern Ireland are given a warning about home repossession resulting from failed repayments on mortgages or other secured loans.
No warnings were found on the consequences of failing to make payments on unsecured loans. No evidence that the bank avails of the FSA Debt Test was found either. This facility is designed to help customers find out whether they have, or are likely to have, problems with borrowing. It also has tips on what to do if customers find themselves in difficulties.
3. Debt Management and Advice
Options offered to customers experience difficulty making payments include possible regular or fixed repayments for debts, reducing or suspending repayments for a set time.’
The bank refers customers to free advice services including the Citizens Advice Bureau and the Consumer Credit Counselling Service (CCCS).
The bank states that it offers up to two payment breaks per year (up to two months) on personal loans (unsecured). It further states that payment free month(s) must be selected prior to completion of a loan and that the monthly repayment amount will increase as a consequence. No similar service was found for secured loans (mortgages).
Similarly, no information was found regarding re-housing advice or liaison with organisations such as Shelter and the Citizens Advice Bureau to work out re-housing arrangements with mortgage customers facing repossession. The bank does not outline the steps leading up to repossession of property/court action.
Financial Exclusion
The bank offers a basic bank account to low income customers.
In terms of access for potentially excluded groups, Bank of Ireland has made the following provisions:
- Migrant Worker Initiative - translation of 10 key product/service brochures and welcome pack on account opening in foreign languages such as Polish, Russian and Chinese
- Polish Telephone Line - advice on all products and services to Polish-speaking customers
Environment
Bank of Ireland’s policy addresses the key areas of energy efficiency and waste management. An environmental management system is in place to monitor and improve performance.
Carbon Neutral
No pledge to make business operations carbon neutral was found.
Equal Opportunities
No evidence of policy found with regard to gender, race or sexuality. However, the bank reports that it employs people with disabilities. Its Customer Operations has a long track record of recruiting people with a disability and in recognition of this was awarded the 'Overall O2 Ability Award Best Practice - Private Sector' Company in 2006.
Women on the Board
According to figures from 2008, 13.3% of board members are women.
Voluntary Standards & Initiatives
Bank of Ireland (UK)
UK:
- Business and Corporate Banking
Northern Ireland:
- Current Accounts
- Savings
- Credit Cards
- Investments
- Mortgages
- Insurance (Home)
- Student Current Account
Bank of Ireland (UK)
Bank of Ireland (GB)
Customer Care
Bow Bells House
1 Bread Street
London
EC4M 9BE
