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Barclaycard, the credit card issuing arm of United Kingdom-based Barclays PLC, Wednesday announced it would freeze interest rates for all UK customers for four months and reduce rates on certain cards taken by new customers. The issuer, which has nearly 12 million UK customers, says the freeze applies to interest rates for purchases made by consumer cardholders. Interest rates for purchases will decrease between 250 and 500 basis points for at least 3 million consumer cardholders, the issuer says. Those consumers have a "low-risk" profile, the issuer says. Annual percentage rates for new customers who receive platinum or OnePulse cards¬¬¬—a Visa-branded card that enables contactless purchases including transit fares in the London area—will stand at 12.4%, down from 14.9% now, a Barclaycard spokesperson tells CardLine Global. The issuer also has set up a help line for customers worried about card debt and will contact "customers who are showing potential signs of financial difficulty before they miss payments to offer support and advice … as soon as possible," Barclaycard says in a statement. The rate changes come during a deepening recession in the UK and government pressure on issuers about card debt. Last year, a meeting organized by the UK Department for Business Enterprise and Regulatory Reform and attended by members of the credit card industry produced promises from issuers to give cardholders in financial trouble more time to pay debts and to offer more transparency on rate increases (CardLine Global, 12 Dec. 2008). The meeting had only an indirect influence on Barclaycard's interest-rate changes, the issuer's spokesperson says. A spokesperson for APACS, a UK trade group that includes issuers, said that while the meeting likely had an indirect role in the rate changes, the need to gain and keep more customers in the competitive UK card market also drove Barclaycard's decision. In any case, Barclaycard, in freezing its rates, appeared to go beyond the promises that came out of the meeting.
