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
Credit Card Provider
Nationwide Building Society
Green/Ethical Products
- Ethical Trust (via Legal & General)
- Basic Bank Account
Ethical Lending or Insurance
Nationwide does not have an ethical lending policy. However, as a building society the majority of its lending is to individuals in the form of mortgages. Its commercial lending is concentrated in the following three sectors:
- UK registered social landlords (Housing Associations)
- Commercial and residential property investors
- Private Finance Initiatives (PFI) funding schools, hospitals and social housing projects
Responsible Lending
1. Credit Lending
Nationwide Building Society offers an LTV (loan-to-value) rate up to 85% for new customers. This compares favourably with the FSA’s Turner Review suggestion of a maximum LTV of 90%, i.e. the borrower should have at least a 10% deposit.
However, the building society is also offering 125% mortgage to existing customers in negative equity who want to move house. Negative equity means that the value of the customer’s home is less than the amount they owe on their mortgage. Figures for its LTI (loan-to-income) rates were not found.
Nationwide says that it makes an assessment of a customer’s ability to make regular payments using ‘appropriate credit assessment techniques’, before providing credit. It further states that it may share credit data with other lenders: ‘both to improve the quality of our decisions and to reduce the risk of you becoming over-committed’.
Nationwide says that credit limit increases are assessed on a customer’s personal circumstances and that the customer can request a change to their limit at any time.
2. Debt Warning
Nationwide issues the generic warning to its mortgage customers: ‘Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.’ No warnings were found in relation to the consequences of falling behind on payments on unsecured credit.
The building society provides a link to the FSA’s Debt Test as part of its ‘Payment Difficulties’ section. This test is designed 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 difficulties.
3. Debt Management and Advice
Nationwide outlines the steps involved in its repossession process. It also presents possible temporary solutions for customers defaulting on loan repayments, these are:
- An arrangement - an agreement to make payments over and above the contractual minimum, to repay arrears
- A concession - an agreement for the customer to make payments below the contractual minimum, which may be agreed to assist cases of financial difficulties
Nationwide may grant a mortgage payment holiday of up to three months in the case of an emergency, such as a bereavement or hospitalisation. Mortgage payment breaks between three and 12 months may also be offered. To avail of these the customer must have held a Nationwide mortgage for more than one year and have a mortgage that is less than 80% of the value of the home at the end of the payment holiday. Such holidays are not permitted for personal loans.
No evidence was found that the bank offers re-housing advice or liaises with organisations such as Shelter and the Citizens Advice Bureau to work out re-housing arrangements with mortgage customers facing repossession.
Financial Exclusion
Nationwide offers a basic account with no credit facilities to low income/financially excluded customers.
The building society does not engage in partnerships with credit unions or other mutual organisations.
In terms of access provisions for financially excluded customers, Nationwide is involved with a coalition of Bristol-based anti-poverty groups to provide free-to-use cash machines in low-income areas across Bristol and Weston-super-Mare.
At a branch level, Nationwide offers facilities to assist those with impaired hearing or sight, literature in the most common foreign languages and in Braille, large print and audio. ‘Helping Hand’ units are also available at branches and these contain Braille bank note sizers, magnifiers to assist customers who may have difficulty reading small print, clipboards and a specially-designed lap-pad for customers in wheelchairs.
The building society also makes some access provisions for customers in small towns and villages by offering services through local agencies.
As a building society Nationwide has limited involvement in microfinance though it states that is offers products to those who are self-employed through its specialist lending arms.
Nationwide states that it does not offer preferential lending within deprived communities, it does, however, offer Private Finance Initiatives (PFI) funding new schools, hospitals and social housing projects.
Environment
The building society’s environment policy addresses the key issues of energy efficiency and waste management and a management system is in place to monitor the policy’s implementation. It also shows a commitment to continued improvement of its environmental performance.
Carbon Neutral
No set target, but Nationwide states that it has reduced the carbon footprint of its business operations by 85% since 2005.
Equal Opportunities
The building society’s equal opportunities policy addresses the key issues: race, gender, disability and sexuality.
Women on the Board
The building society reported 20% in 2008.
Voluntary Standards & Initiatives
Charitable Giving
The building society has pledged to donate 1% of its pre-tax profits.
Nationwide Building Society
- Current Accounts
- Savings
- Investments
- Credit Cards
- Loans
- Mortgages
- Insurance (Home, Motor, Travel, Life, Critical Illness, Income Protection)
Nationwide Building Society
Nationwide Building Society
Member Service
Kings Park Road
Moulton Park
Northampton
NN3 6NW
