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
First Trust Bank
Green/Ethical Products
- Basic Bank Account (available to customers in Northern Ireland only)
Ethical Lending or Insurance
There is no specific reference to who the bank will and will not lend to in their Code of Business Ethics.
However, parent company AIB applies ethical screening criteria in investments and project finance including, but not necessarily restricted to, areas such as tobacco manufacturing, pornography, gambling, armaments, oppressive regimes, human rights abuses and environmental issues.
In 2007 AIB Corporate Banking launched a €350m sustainable energy fund to support companies operating in the energy sector.
Responsible Lending
1. Credit Lending
First Trust offers a 75% standard LTV (loan-to-value) rate to mortgage borrowers, rising to 90% for first time buyers. This compares favourably with the FSA’s Turner Review suggestion that LTV rates be set at 90%, i.e. that borrowers should have at least a 10% deposit for a mortgage.
The bank has set its LTI (loan-to-income) rates at 3 times gross income for single applicants, against comparing favourably with the Review’s analysis which suggests lending to 3.5 times of income for single borrowers.
The bank automatically conducts searches with a credit reference agency for all loan applicants through its New Applications Processing System (NAPS).
It explicitly states that it does not solicit customers with unrequested increases in credit limits (i.e. on credit cards or overdrafts).
2. Debt Warning
The bank offers the following generic warning to mortgage and secured loan customers: ‘Your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it.’ Warnings about unsecured credit were found in relation to credit cards only.
First Trust uses a ‘Borrowing Wizard’ to calculate monthly loan repayments. However, it is just a calculation, with no related warning system and it is not clearly related to debt management. It does not refer customers to the FSA Debt Test or an equivalent. This facility is designed aims to help customers find out whether you have, or are likely to have, problems with borrowing. It also has tips on what to do if customers find themselves in difficulty.
3. Debt Management and Advice
First Trust recommends that customers experiencing financial difficulties talk to them at the earliest opportunity and provides a list of possible circumstances personal and business customers may find themselves in.
The bank states: ‘With your [the customer’s] co-operation we will help develop a plan to deal with your financial difficulties, consistent with your interests and ours and we will tell you in writing what we have agreed. We will also liaise with debt counselling organisations such as Citizens Advice Bureau, business support organisations or your professional advisers where you give us permission.’
It is not specified whether this applies to customers with secured credit (mortgages) or just those with unsecured credit.
Furthermore, no information was available regarding possible payment breaks/holidays for either secured or unsecured loans, though the bank stated in its response to our research that if customers fall into arrears options explored with them include restructuring, interest-only payments or a moratorium.
No evidence was found that the bank offers re-housing advice to customers facing possible repossession or if it liaises with organisations such as Shelter and the Citizens Advice Bureau.
Financial Exclusion
The bank offers a basic account to customers in Northern Ireland.
The First Trust Bank website complies with WA1 accessibility standards (level 2AA) as provided by the World Wide Web Consortium. This standard ensures that website content can be navigated and read by everyone, regardless of their location, experience or the type of computer technology, and impairment such as blindness, partial sight, deafness, dyslexia, tremors or lack of dexterity in hands and fingers.
Environment
First Trust’s environment policy and commitments covers the key areas of energy efficiency and waste management. It also shows commitment to continued improvement of its environmental performance.
Carbon Neutral
No pledge was found to make business operations carbon neutral.
Equal Opportunities
The bank’s equal opportunities statement addresses the key areas: race, gender, sexuality and disability.
Women on the Board
The parent company reports 14% for 2007.
Voluntary Standards & Initiatives
Not by itself, but the parent company, Allied Irish Bank, is a signatory of:
Charitable Giving
First Trust Bank does not indicate any aggregate amount, but the parent company AIB reports at 31 December 2007 that First Trust Bank’s staff charity programme raised £145,000 in the last 18 months for the Staff Charity Hospice Care at Home.
One of the main recipients of charitable donations from the parent company is the ‘Better Ireland’ programme which donated some €2m to children’s groups in 2008.
First Trust Bank
- Current Accounts
- Savings
- Investments
- Credit Cards
- Loans
- Mortgages
- Insurance (Home, Mortgage Protection)
- Student Current Account
- Student Credit Card
