Increased Costs Faced By Bank of Scotland Credit Card Holders

9th May 2011

Bank of Scotland credit card holders might be subject to severe increases in the interest rates they pay on their credit cards. Such changes are expected to seriously affect the financially vulnerable and may result in an increase in serious debt problems for some people, increasing the number of those in need of Scottish trust deeds.

Credit card debt has traditionally been the main component in the creditor lists of many Scottish trust deeds. The convenience of using such a payment method is the comparatively low monthly payments and increased credit limits offered to clients, making users more vulnerable to increasing overall debt levels.

One reason why personal debt problems are so rife is the banks failure to pass on general interest rate reductions to those with credit card balances. In fact, using the defence of increasing write-offs, the banks have increased credit card interest while the bank base rate has been at historically low levels for two years. Such actions have increased the number of Scottish trust deeds in circulation.

In itself that may seem like profiteering, however, to make matters worse the Bank of Scotland are now going to take advantage of the low interest rates by connecting their credit card rates to the bank base rate. Clearly, the base rate is only going to increase from the point at which it is set today. Such questionable banking methods are exactly those which put people in the position where they need Scottish trust deeds in the first place.

Further changes extend to altering the interest rate paid by a client according to his or her behaviour. For example, someone who uses a card to withdraw cash from time to time may see their rate increase. Using a credit card to obtain cash is common where debt problems already exist and people seek to tide themselves over until their next salary payment.

If you miss payments or go over your credit card limit your interest rate may be increased. Again the financially vulnerable, especially those who are already in serious debt, will see their debt servicing costs increase, prompting further worry and an increase in Scottish trust deeds.

The bank has also said that they can increase rates if they become less profitable for any reason! Clients will be relieved to know that they can opt out of these changes, but only if they agree not to use the credit card for any further purchases or withdrawals.

The argument is that this type of credit card charging structure is more transparent. It almost certainly is, but that will come as no relief to financially vulnerable Bank of Scotland credit card holders who find that the changes ultimately push them into Scottish trust deeds or bankruptcy.

‘Transparency’ is clearly a very different concept to fairness. How a part-nationalised bank (remember, we own a fair chunk of it) can assume that it is acceptable to treat their clients in this way is stunning. Their failure to reduce credit card costs when the interest rate was tumbling was a recipe for debt, sequestration and Scottish trust deeds. Their willingness to drive up credit card costs for the financially vulnerable signifies contempt in our book.

If you live in Scotland and are struggling with uncontrollable debt levels then Scottish trust deeds could be the best option for you to re-establish a debt free life. For further information regarding the exact ins and outs of Scottish trust deeds please do not hesitate to call our debt advice line on 0800 043 7201.

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