Barclaycard tackles errant cardholders in the UK

Having written off a record £1.57 billion in 2006, Barclaycard is setting in motion a series of steps it hopes will tackle the growing problem among its cardholders to repay their credit card debt.

With 11 million cardholders, Barclaycard is the UK's largest credit card provider. This does not mean, however, that it has not been without its problems. Indeed, recent talk has been that Barclaycard's parent company, Barclays, has been looking to offload its credit card division to stave-off the growing problems. Measures currently being put in place that Barclaycard hopes will turn the tide include imposing stricter credit card controls, reducing cardholders card limits, and stopping cardholders from making cash withdrawals on their credit cards.

In a number of cases Barclaycard has imposed these measures on their cardholders without having even informed them that such radical precautions are being put in place.

However, keeping a closer eye on its cardholders has not come without a cost. Manpower requirements mean that Barclaycard are now turning down 50 percent of all new credit card application.

Among the warning signals that the credit card provider are looking for among its potentially errant cardholders are large amounts of cash withdrawals on their cards, cardholders who only make the minimum repayment on their credit cards each month, or cardholders who miss payments altogether. Barclaycard are also staying in close contact with credit reference agencies to see if any of their credit cardholders are experiencing problems elsewhere, and at first sign that cardholders could be experiencing problems in other areas of their lives are imposing the strict measures on their Barclaycard.

A spokesperson for Barclaycard said they hoped that: "By taking this action, Barclaycard aims to help prevent customers from getting into deeper financial problems." Adding that: “We are acting on information held either by Barclaycard or a credit reference agency which suggests customers may be experiencing financial difficulty."

Although Barclaycard's practices have not meet with universal approval, Sandra Quinn, from the banking organisation Associated Payment Clearing Services (Apacs), said: "It's nice to know they [Barclaycard] are doing what they said they are doing" when commenting on claims by UK credit card providers that they would be acting more responsible with their lending practices following last year's record numbers of bankruptcies, IVAs and debt write-offs in the UK.

Richard Smith
20th February 2007