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
Yorkshire Building Society
Green/Ethical Products
- Flexible Home Energy Efficiency Additional Loan (restricted to Yorkshire BS’s mortgage customers only)
Ethical Lending or Insurance
No details of an ethical lending policy was found. However, as this is a mutual building society it is less likely to lend or be exposed to typically ‘unethical’ commercial interests.
Responsible Lending
1. Credit Lending
Yorkshire Building Society offers a LTV (loan-to-value) up to 85% of the purchase price or valuation for the property. 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.
Figures for its LTI (loan-to-income) rates were not found. In this instance the Turner reviews a rate of 3.5 times gross annual income for single applicants.
The building society may use an automated system, such as credit scoring, to assist in its lending decisions. It does not specify whether it runs checks through credit reference agencies either.
2. Debt Warning
The building society issues the following warnings to its customers:
- ‘Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.’
- ‘Consolidating your debt may increase the amount you pay back overall and extend the repayment period for your debts.’
No evidence was found that the building society uses or recommends the FSA Debt Test or an equivalent. This facility is designed to help customers find out whether they have, or are likely to have, problems with borrowing.
3. Debt Management and Advice
In outlining its policies with regard to customers in financial difficulty, the building society says it will:
- Contact customers ‘as soon as possible’ to discuss their situation
- Look at arranging a new payment plan
- Consider changing the way payments are made, or the date they are made
- Allow customers to pay their mortgage over a longer period of time, thus reducing monthly payments
- Change the type of mortgage the customer has
- Arrange for debt counsellor visit (the cost may be charged to the mortgage account)
- Give customers ‘reasonable time’ to pay back the debt
- Talk to an agency like Citizens Advice Bureau to arrange a payment plan, if requested
It further outlines the steps involved in the repossession process.
Payment holidays are offered to customers who have previously overpaid their mortgage up to the amount they have overpaid only.
No information was found with regard to provisions for customers with unsecured loans experiencing financial difficulty.
No evidence was found that the building society 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
The society does not offer any products or services to the financially excluded, nor does it appear to work in partnership with credit unions or offer preferential lending within deprived communities based on the data in the public arena. As a mutual building society funding microfinance projects is beyond its business remit.
The society does offer branch accessibility to customers with mobility difficulties; blind and partially sighted customers; and deaf, hearing impaired and speech impaired customers. Most branches include:
- Staff who are informed about disability issues
- Level access or wheelchair ramps or assistance buttons at entrance
- Power assisted entrance doors
- Hearing aid induction loops
- Sign language interpreters by appointment
- The ability to request account correspondence and marketing literature in alternative formats
Environment
The society expresses a commitment to improve its performance in the key areas of energy efficiency and waste management.
Carbon Neutral
The society’s business operations went carbon neutral in 2007.
Equal Opportunities
The society’s equal opportunities policy addresses the key issues of gender, race, disability and sexuality.
Women on the Board
18.2% of the society's board are women according to 2007 figures.
Voluntary Standards & Initiatives
None
Charitable Giving
The society donated 0.62% of its pre-tax profits in 2007.
Yorkshire Building Society
- Savings
- Loans
- Credit Cards
- Mortgages
- Insurance (Motor, Home, Life, Mortgage Protection)
Yorkshire Building Society
Yorkshire Building Society
Yorkshire House
Yorkshire Drive
Bradford
West Yorkshire
BD5 8LJ
