The Financial Ombudsman Service has thousands of credit card complaints each year. We look at the most common credit card pitfalls and how to avoid them.
Credit cards can be a very cheap way to borrow money or clear outstanding debt, but only if you know how to use them correctly.
Many people fail to understand how credit cards work. Then they’re shocked to find that lenders are well within their rights to impose penalties or raise interest rates when payments are missed.
Common credit card complaint 1: 0% interest cancelled
Most cards require at least the minimum payment to be made each month.
Failure to do this can result in the lender withdrawing the interest-free deal. They may also start charging their standard rate of interest, typically around 20% a year.
Exceeding your credit limit is another reason interest-free deals are discontinued.
Common credit card complaint 2: Penalty charges
Late or missed payments can also result in one-off penalty charges of around £10 being imposed.
Generally credit card charges are not considered by the ombudsman unless the charges are causing financial difficulty to the consumer.
If this is the case, the ombudsman will look into whether the lender is being fair to the consumer.
Common credit card complaint 3: Rising interest rates
Credit card companies are well within their rights to change interest rates, unless you’ve signed up for a fixed-period low-interest offer.
Lenders will typically give plenty of notice if they decide to make any changes. This gives the consumer plenty of time to shop around if they’re not happy with the rate.
Common credit card complaint 4: Being turned down for credit
The ombudsman will generally be unable to consider cases where someone has their credit card application rejected, or where the lender refuses to increase their credit limit.
Financial services take many factors into account when deciding who they’ll take on, especially since the financial crisis a few years ago.
Without a good credit history, you could struggle to get approved for a credit card – especially one with preferential interest rates.
See our guide on how to improve your credit rating.
Free credit card matcher
Before applying for a credit card, you can check the likelihood of being accepted. Try our free credit card matcher tool.