@choosenet
Facebook
More

| Money

If my credit card company is taken over by another company, will they be able to withdraw or change my card deals?

Introductory offers and all the nice things that card companies use to convince customers to spend on their plastic are privileges and, unfortunately, what they giveth, they can taketh away.

Unfortunately, they've been known to be particularly keen to taketh away when a credit card provider changes hands.

However, credit cardholders do have a number of options when new providers bring in new rates, fees or rewards. We'll look at these options after some real life examples of credit card provider changeovers.

Takeover examples

When the credit card accounts of Goldfish credit cardholders were taken over by Barclaycard in June 2010, for example, the new provider wrote to 500,000 customers warning them that their rewards were to be cut in half.

While cardholders previously needed to spend £1,750 to earn a £10 voucher, they then needed to spend £3,500 for the same reward.

On the other hand, in March 2011, Barclaycard announced another take over: this time of Egg's 1.15 million cardholders.

On this occasion, former Egg customers retained their interest rates and cash back earnings during the switch. And some did even better than before after the take over.

However, some former Egg customers did complain about problems with their accounts in the immediate aftermath of the switch: some experienced incorrect balance, cash back or direct debit information on their online banking accounts until Barclaycard rectified the problems.

Rights during a takeover

At the start of 2010 five new rights were established by the Government and card industry for credit card holders, two of these in particular come into play here.

So there are now both rights under the Lending Code and according to provider's Terms and Conditions which can protect consumers when a provider changes hands.

Right to information

Under the Lending Code, providers agree that big changes to credit card accounts must be communicated to customers separately from their normal account statements.

For example, in the case of a change to the credit limit, these communications must include customers':

• Current credit limit
• New, increased, credit limit
• The customer's right to reject the credit limit increase (see below for more on this) and
• Reassurance that the provider won't treat them any differently for rejecting the credit limit

This means that any new card company would have to inform a cardholder of any changes to his or her interest free period or increases to their the minimum they are expected to repay each month.

This must be done at least 30 days before the change in a separate and easy to understand written communication.

Previously, some lenders were only notifying cardholders of changes through their monthly statements.

Right to reject

The right to reject is also worth knowing about when a takeover happens.

If the new credit card provider decides to raise a cardholder's interest rate or credit limit cardholders have a set period to choose to reject those changes.

Cardholders have 60 days to inform their card company when they want to reject an interest rate increase, close the account, and pay off the outstanding balance at the existing rate.

Card companies must also tell customers how much their borrowing will cost at the higher rate, so enabling people to make informed decisions about any impact a rate increase may have.

There's more information about these rules in our full right to reject interest rate increases guide.

Previous terms and conditions

Aside from the Lending Code, it's always worth reading through credit card terms and conditions to familiarise yourself with the potential for providers to withdraw incentives.

In general they'll say something like this clause in an American Express credit card's Terms and Conditions which state that,

"we may change any provision of this agreement at any time, including fees, commissions, card options, how we apply payments and card benefits and services associated with your account and changes affecting your payment obligations."

In particular, credit card reward conditions will always offer the provider a get out clause so that they can change the scheme.

A new provider will have just the same rights as the provider cardholder's signed their agreement with.

When things go wrong

Finally, let's take a look at credit cardholder's right to redress if things go really wrong during a credit card provider switchover.

All UK credit card providers are regulated by the Financial Services Authority (FSA) which means that they'll have a formal complaints procedure.

Before this procedure is entered into most also have an informal procedure - the secure email services, call centres and in branch help that you go to whenever you have a question of complaint about the credit card.

If the problem has not been resolved through these channels, a formal complaint will usually mean writing a letter outlining the problem.

Providers should acknowledge this complaint within 5 days and, within 4 weeks, come back with a formal response.

If the problem is not resolved within 8 weeks the card provider writes with a 'Final Response' and, at that point, cardholders can take the complaint to the independent Financial Ombudsman Service (FOS).

Most complaints should not get to this stage but the takeover of a credit card provider is a flash point where cardholders should know their rights on making a complaint.