Barclaycard Act To Reduce Customer Debt
The annual report from Barclays Bank shows record profits for 2006. However, the profit from Barclaycard, the credit card side of the business, fell by 40%. This was partly due to a 37% increase in bad debt to £2.15bn.
Barclaycard has around 11 million customers and is the biggest credit card lender in the UK. Following an increase in bad debt in 2005, the company has been working to reduce customer debt levels. Action includes looking out for existing customers making large cash withdrawals but only minimum repayments, or those missing payments altogether. Information from credit reference agencies and other banks has also been used to check for any increase in debts with other companies. If Barclaycard consider the customer is getting into financial difficulty then their credit card limit can be cut and their facility to make cash withdrawals reduced. Barclaycard has also refused 50% of new applications. The Chief Executive said the second half of last year had seen a reduction in Barclaycard card balances and fewer missed payments.
The Association of Payment Clearing Services welcomes more responsible lending policies but points out that there is no standard practice adopted by the banks. Annual reports from other major banks are due to be published shortly and may show further increases in bad debt. A total of £3.3bn was lost to bad debtors by UK banks in the first 6 months of last year.
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