Credit card companies have recently lashed out at alternative forms of high-interest credit in an effort to remain relevant in a financial landscape where the no credit check loans industry has been growing by leaps and bounds lately.
With many Brits finding it decidedly more difficult to obtain credit from traditional sources such as banks and building societies, many have turned towards payday advance firms for their short term lending needs. Moreover, those that still have credit cards are paying off more than they are spending, with outstanding debt declining by 5 per cent in the last year, according to a new PriceWaterhouseCoopers report.
In order to combat this trend, credit card companies have begun a campaign to encourage credit card use by drawing attention to the benefits of paying with plastic, especially in comparison to the relatively thin benefits provided by payday lenders to their customers.
One such benefit pointed out has been the consumer protection you gain from purchasing items over £100 with a credit card, as the Consumer Credit Act makes it compulsory for the card provider to refund the price of a purchase if the retailer goes bust or something goes wrong with the purchase. Payday loans don’t come with a similar guarantee, of course, but lenders are quick to point out that most card purchases are well under £100 as Brits shy away from making large purchases using their credit cards, thus making the actual benefit only applicable in a dwindling number of instances.
Of course, this benefit only applies to people who already have credit cards. For the nation’s low income earners who have been struggling with pay freezes and rising household bills, credit cards can remain tantalizingly out of reach, but short term loans do not require credit checks, making it easy for Brits in need to get the cash they require quickly and without having to jump through too many hoops.