First Direct bringing in big change for customers who have a credit card

The First Direct Balance Transfer Credit Card is built to help you manage existing debt, with one monthly payment. It could also save you money with a potentially lower interest rate.
-Credit:Reach Publishing Services Limited


First Direct will be hiking the interest rates on its credit card products within weeks. The First Direct Balance Transfer Credit Card is built to help you manage existing debt, with one monthly payment. It could also save you money with a potentially lower interest rate.

Its Gold Card is built to help spread the cost of your big purchases, so you can buy now and pay for it gradually over time. First Direct will increase the interest rates offered on credit card purchases, balance transfers and cash withdrawals from April 15.

The annual percentage rate (APR) for purchases will jump from 19.9% to 24.9%, adding an extra £0.35 per month for every £100 owed. The same increases will apply to balance transfers and money transfers. The APR charged for those making cash or cash-related payments including withdrawals will rise from 24.7% to 29.7%, costing an additional £0.33 per month for every £100.

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On its website, First Direct explained: "Promotional rates are only available to first direct current account holders who haven't had a Credit Card or Gold Card with us over the last six months. At the end of the promotional period the rate will change to the standard variable rate that applies at the time.

"Balances can’t be transferred from all cards, for example those issued by members of the HSBC Group, including HSBC UK, first direct, and M&S Bank." Alastair Douglas, chief executive of TotallyMoney said: "Although interest rates are expected to come down this year, as the government pushes the Bank of England to help grow the economy, there's a good chance that we might not see like-for-like benefits being passed on to consumers.

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"It's also likely that as people continue to struggle with the increased cost of living, and three in five adults expect their finances to get worse this year, that we might see an increase in late payments and defaults on credit agreements."

Rachel Springall, finance expert at Moneyfactscompare.co.uk, added: "Lenders traditionally reassess the rates they charge on debts as a reflection of their attitude to risk, as when the risk of defaults is elevated, the cost to borrow would usually rise."