Do the words ‘loyal customer’ and ‘excellent credit rating’ no longer count in today’s world?

“What are Virgin Money’s Interest Rates?

Virgin Money charges a variable interest rate that is linked to the repo rate. This means that the interest you pay on your outstanding balance, and also the interest that you earn on a positive balance, changes with the repo rate.

You have up to 25 days at the end of every month to settle your full outstanding balance of swiped purchases. After this you will be charged the rate that applies at the time. Here, is where you need to pay attention as our lawyers have told us that there are different rules that apply to customers who have been contracted under the Usury Act and customers who have been contracted under the National Credit Act that replaced the first mentioned in June 2007. This means that if you have been a customer from before 01 June 2007 your interest rate on an outstanding balance is 18.5% and if you have become a customer after that your interest will be 15.5%.”

I was browsing through one of my bank’s websites, and came across the above mentioned paragraph regarding the legalities/terms and conditions regarding the use of their credit card account. Needless to say, I was shocked. Mind you, I think outraged would be a far more descriptive term.

It would seem like loyalty and an excellent credit rating mean nothing to banking institutions here in South Africa anymore. These days, the customers with excellent credit ratings who pay on time each month, are lumped together with those who skip payments, pay less than minimum payments and who, in general, have shoddy credit records.

As per the pasted paragraph at the beginning of this post, the bank states that customers who have been with them before a certain date, are subject to higher interest rates than customers who have been with them from a later date. In a way, I sense discrimination, as well as generalisation here.

New laws were passed in South Africa during 2007, to apparently protect consumers from unscrupulously high interest rates. But it would seem like it is only intended to protect new consumers. Older consumers seem to be once again, left to fend for themselves regarding high interest rates and bank charges.

So it would seem that this ruling regarding the New Credit Act, or NCA as we know it in South Africa, is discriminatory in a few ways. Firstly, I feel that a person’s credit rating status should at least count for something. Surely, if you have an excellent rating, and your next door neighbour doesn’t, is it really fair that you both get the same interest rate? I think not!

Secondly, surely the banks can see that those who have been with them longer, are obviously happy with them? In that case, it may just be in their best interests to see what they can do to keep their long-standing customers happy. Looks like it’s a case of ‘they’re happy with us, and don’t have many other choices regarding where they do their banking, so we can take as much advantage as possible and there isn’t much they can do about it.’

Although that seems to be the general consensus in South Africa regarding banking. There really aren’t that many banking institutions to choose from, so there is in fact very little competition. At the end of the day, the consumer is the hardest hit by this, because almost every month, the banks here come up with new and creative fees to make money out of us.

We pay for withdrawals at our own atm. We pay to deposit cash at our own atm. We pay to deposit change into our bank accounts. We pay for the privilege of simply having a checking account (yes, horror of horrors, there is no such thing as ING here to offer us a free checking account). Most credit cards here have an annual fee. I know of only one that doesn’t.

Banks here make a big issue about telling you that they don’t charge you swipe fees on credit cards, but what they don’t tell you is that if you don’t read the small print, they will find other ways to swipe your money from you.

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