Barclaycard unveils Goldfish deal
Barclaycard has ramped up its credit card rewards scheme as part of the migration of 1.7 million Goldfish credit card customers.
At the start of this year, Barclaycard agreed to buy Discover Financial Service’s UK credit card business, which included Goldfish as well as several affinity credit card deals including Buy & Fly and Blackhorse. The acquisition prompted concerns that Barclaycard would scrap the popular rewards programme that attracted many customers to the Goldfish brand.
Over the next two months, Barclaycard will move 1.7 million former Discover customers over to its systems, but has pledged to offer them the same, if not better deals, that they already enjoy.
The company’s managing director of credit cards, Amer Sajed, says all customers will be migrated over regardless of their credit history or whether or not they are in default on payments.
In addition, an estimated one million customers will be given contactless payment enhanced cards, which will allow them to make purchases for items under £10 without the need to enter their pin or sign a receipt.
This is part of Barclaycard's multi-million pound investment in contractless payment. Earlier this week, Antony Jenkins, the chief executive of Barclaycard, forecast the death of plastic payments, with shoppers eventually able to make purchases using biometric scans or even chips embedded in inanimate objects such as key fobs.
“The chips on credit cards now have incredible untapped capability, but the plastic around the chip limits its potential,” says Jenkins. “Take the plastic away and the possibilities are endless, allowing the customer to pay by using something that they are already carrying, be it a mobile, key fob or even via biometrics.”
Of the 11 cards offered by Discover, Barclaycard is keeping nine with the remaining three rebranded.
All customers will keep the same APR they were on prior to the acquisition, and any annual fees will also be retained. As an additional bonus to those moving over, cash handling fees have been cut from 3% to 2.5% and foreign exchange fees from 3% to 2.75%.
The new cards are currently only available to those customers migrating over from Discover, but Barclaycard says it plans to offer them to new customers from early 2009. However, Sajed admits that the deals for new customers are unlikely to look as competitive as those former Discover customers will enjoy, and typical APRs have not yet been decided.
So, are there any catches for former-Discover customers? On the face of it, no. Barclaycard says all 1.7 million customers will retain the same deal they were on prior to the takeover or acquire better deals.
However, although customers with Goldfish Rewards credit cards will continue to receive cashback, the terms and conditions of this have changed in a way that could disadvantage some people.
Instead of cashback being sent to customers in the form of a cheque on request, it will now be automatically issued onto their card in the form of credit. So, instead of cashback customers being able to invest this bonus, say, in an ISA or savings accounts, they will only be able to use it to make purchases.
Ali Chaudhry, director of rewards at Barclaycard, says this change was prompted from customer surveys: “85% of people said they would rather the cashback was put straight back on their cards as credit."
Another consquence worth bearing in mind is the impact of the new range of cards on Barclaycard’s existing reward programme.
Sajed says that it has no immediate plans to scrap its existing reward card - the Football card which offers reward points for football merchandise - but that this offering is under review and could be chopped down the line.
Invidivual Savings Accounts were introduced on 6 April 1999 to replace personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs) with one plan that covered both stockmarket and savings products, the returns from which are tax-exempt. The ISA is not in itself an investment product. Rather, it’s a tax-free “wrapper” in which you place investments and savings up to a specified annual allowance where the returns (capital growth, dividends, interest) are tax-exempt (you don’t have to declare ISAs and their contents on your tax return). However, any dividends are taxed within the investment, and that can’t be reclaimed.
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.
This is used to compare interest rates for borrowing. It is the total (or “gross”) interest you’ll pay over the life of a loan, including charges and fees. For credit cards where interest is charged at more frequent intervals, the APR includes a “compounding” effect (paying interest on interest). So for a credit card charging 2% interest a month (equating to 24% a year), the APR would actually be 26.82%.