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
Post Office Personal Banking
Green/Ethical Products
- POCA (Post Office Card Account)
Ethical Lending or Insurance
No evidence of an ethical policy.
Responsible Lending
1. Credit Lending
Post Office Personal Banking offers a LTV (loan-to-value) rate of up to 80%. This compares favourably with the suggestions laid out in the FSA’s Turner Review that banks should lend no more than 90% of the value of a property. The Post Office offers an LTI (loan-to-income) rate of 4.5 times the main income plus 1 times the second allowable income or 4 times joint income if greater. The Turner Review suggests 3.5 times the income of a single applicant.
With regard to unsecured loans the Post Office says it ‘may’ check a customer’s record at a credit reference agency. Credit scoring which is based on information submitted by the customer is used to assess credit card applications.
No policy was found to avoid or prevent offering unrequested increases in credit limits to customers.
2. Debt Warning
The Post Office’s mortgage literature carries a generic warning: ‘Your home may be repossessed if you do not keep up repayments on your mortgage.’
It does not refer customers the FSA Debt Test to find out whether they have, or are likely to have, problems with borrowing. It does provide an Affordability Calculator which tells customers how much they can borrow based on annual income and monthly outgoings, but carries no warning at the end of the calculation.
No warnings directed at unsecured loan customers were found.
3. Debt Management and Advice
No information or policies on mortgage payment default and handling payment problems were found. Similarly no information was found with regard to the possibility of payment holidays/breaks or whether the Post Office 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.
For other customers, the Post Office asks them to call if they find themselves in financial difficulty, but no details are provided of possible advice/help they will receive. There is no evidence that a system is in place for the Post Office to contact customers first.
Financial Exclusion
The internet banking facility is in line with the Web Accessibility Initiative (WAI) and the Disability Discrimination Act (DDA) 1995. The Post Office also has the largest free-to-use cash ATMs network in the UK (Post Office rural network).
Environment
The Royal Mail’s environment policy applies across the group and covers the key areas of climate change/energy efficiency and waste management. The policy also contains a commitment to continued improvement in performance.
Carbon Neutral
No pledge was found on making business operations carbon neutral.
Equal Opportunities
The parent company’s policy covers the key areas: gender, race, disability and sexuality.
Women on the Board
No data found.
Voluntary Standards & Initiatives
Parent company, Royal Mail, is signatory of:
Post Office Personal Banking
- Current Accounts
- Savings
- Credit Cards
- Loans
- Insurance (Home, Motor, Travel, Pet, Life)
Post Office Personal Banking
Post Office Personal Banking Post Office Customer Care
PO Box 740
Barnsley
S73 0ZJ
