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
Norwich & Peterborough Building Society
Green/Ethical Products
- Green mortgage (plant 40 trees per mortgage and available for new homes with a Standard Assessment Procedure (SAP) rating of 100 or higher or to those looking to make their home more energy efficient)
- Brown mortgage (offers free energy survey and advice on making property energy efficient)
- Basic Bank Account
Ethical Lending or Insurance
The society does not have an ethical lending policy in place. However, as Norwich & Peterborough's commercial lending arm only lends to small and medium sized businesses in the UK it is less likely to be exposed to problem businesses.
Responsible Lending
1. Credit Lending
Norwich & Peterborough offers LTV (loan-to-value) mortgage rates up to 80%, comparing 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. It does not specify a LTI (loan-to-income) rate. The Turner Review’s suggestion is 3.5 times gross annual income. The building society states that it uses an affordability calculator to establish how much can be borrowed, however, this system does not come with clearly defined limitations on the amount of credit available.
The building society uses both credit scoring and credit reference agencies to assess mortgage and personal loan applicants and customers are informed of these checks on application.
2. Debt Warning
The building society uses a generic warning with regard to mortgages: ‘Your home may be repossessed if you do not keep up repayments on your mortgage’. No warnings as to the consequences of payment default for personal loans were found.
It does not refer customers to the FSA’s Debt Test or any equivalent service, though it does refer them to the FSA’s Customer Information and Money Made Clear websites. The debt test is designed to help customers find out whether they have, or are likely to have, problems with borrowing. It does offer access to a ‘budget planner’ for existing customers experiencing financial difficulty.
3. Debt Management and Advice
In their leaflet ‘A Guide for Customers in Arrears’ the building society set out what it will do to help customers experiencing financial difficulties. This includes:
- Contacting the customer to discuss their financial problems
- Talking to a free debt advice agency on their behalf on request
- Looking at possible changes to the customer’s existing payment plans
It also clearly sets out the stages leading up to and after repossession. It states that before repossession it will give the customer ‘advice about getting in touch’ with their local authority with regard to re-housing. The extent of this advice is not illustrated, i.e. whether the building society provides customers with contact details or actually liaises with organisations on their behalf.
Financial Exclusion
The society offers a basic bank account to anyone over the age of 16.
The society states that all its branches are accessible for disabled people. Its website also offers some accessibility options to disabled customers.
Norwich & Peterborough states that it does not lend to disadvantaged communities at preferential rates as a general rule, but in the past has lent at a favourable rate to charitable organisations.
As a building society, NPBS does not fund microfinance projects.
Environment
The society addresses the key issues of energy efficiency and waste management in its environmental policy. This does not contain information regarding the society’s long-term commitment to improved environmental performance however.
Carbon Neutral
The society’s business operations have been carbon neutral since 2007.
Equal Opportunities
The society’s policy addresses the key equality issues of gender, race, disability and sexuality.
Women on the Board
15.4% reported in 2007.
Voluntary Standards & Initiatives
None
Charitable Giving
The society states that it aims to donate around 1% of pre-tax profits to local charities and good causes.
Norwich & Peterborough Building Society
- Current Accounts
- Savings
- Credit Cards
- Loans
- Mortgages
- Insurance
Norwich & Peterborough Building Society
Norwich & Peterborough Building Society
Peterborough Business Park
Lynch Wood
Peterborough
PE2 6WZ
