May 9, 2005

How does this sound? Some of us will soon be asked to pay a deposit for our when we are applying to take on out. If you don’t think that it sounds too good, then that is what Capital One is asking some potential customers.

This applies to customers with a poor credit history

Though to give them some credit, it will only apply to any customer who has a bad credit rating and financial history, who will be seen a potential risk, so by asking them for a deposit of upwards of £49 to £200 depending on their credit history, to guarantee the issue of a credit card, though some other non payment stipulations are added to that as well, and a card will not be issued until those are met and Capital One has received the deposit in full.

How can we really look at this?

Well it’s all set up the interests of Capital One, as to me the purpose of applying for a credit card if you are short of cash, is the need that some potential customers are wanting a credit card, are doing so because they are in need for financial help, so by punishing those who cant afford even the smallest of the deposits (£49) never mind a £200 deposit in the first place, is only going to cause them even more financial despair.

Experts have already labelled Capital Ones latest offer as “Financially Punitive” and “Highly Unusual”.

So what requirements do you need to have to receive a Capital One credit card now?

Well first of all you will have to have the deposit to start with because you can’t go any further without it. Next you have to be a U.K resident, be over the age of 18 and you will also have to show Capital One proof of your name and address, once you have done all that, you will have to be bankrupt free and your name will not show up on any fraud databases, which is fair enough.

So once you have worked your way through the whole process, what sort of credit limit will you are looking at when you receive your credit card?

The credit limits will be set at £200 to £2,500 with this also being judged on your credit history, so if you have a really poor credit history and had to pay the full £200 deposit, you could be staring back at a credit card that only has a limit of the £200 that you have paid to Capital One in the first place, add to that a annual APR of 29.9% against a normal credit card issuers interest rate of between 15-18% and if you Capital One discover that you have not met a payment, they will use your deposit to reimburse any loses, it doesn’t make for a good deal, does it.

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Capital One have said that the use of the deposit to pay for any payments that were not met, will only come into force, once all the usual avenues have been explored to retrieve payment, with any penalties for late or no payment being charged also, with the deposit being used to recover the debt ensued, when having to close down an account.

A spokesman for Capital One, Richard Holmes, stuck by the credit card issuers policy to charge for the credit card, he said “that by having the deposit from customers, we are able to give such customers who would normally be refused a credit card from other issuers, the chance to have a credit card facility that is an essential tool for today for making purchases”

This is not a new way of issuing, as it is becoming more and more common practice in America, for customers who are seen as a high risk and will no doubt lead to being ever more popular in the U.K, as credit card issuers turn to pre-paid.

Consumer Credit Counselling Service chairman Malcolm Hurlston, thinks that because people will have the need for, as not having any plastic can be of a disadvantage in today’s world, in theory they are not against the principle of the policy, but a close eye will have to be kept on it, to make sure that it is a policy that is fair and right for any potential customers who wish to use the facility.

This is a sign of the future

Capital One have already claimed that up to now the credit card has been a success and will continue with it in the future for now, though credit card issuers such as Barclaycard have been quoted as saying that they have no plans to introduce the policy in they’re and said it is the first time that they have known for this to be applied in the U.K.