Barclaycard, the UK's largest credit card provider, is cutting rates for three million customers in an attempt to "ease pressure on borrowers."
Of its 11.9 million customers, around a quarter will see their rates cut, while the remaining nine million will see their credit card
"We recognise that 2009 is going to be a difficult year for many people and we want to do what we can, when we can, to help Barclaycard's customers,” said Antony Jenkins, chief executive of Barclaycard.Barclaycard credit cards
has reduced the APR on the Barclaycard Platinum and Barclaycard OnePulse credit cards by 2.5 per cent to 12.4 per cent for new customers, while "selected" existing customers – around three million in all - will see rates reduced by between 2.5 per cent and five per cent.
Barclaycard is also freezing the prices for all its UK credit cad customers for "at least the next four months."
"Although committed to the principle of risk-based pricing the business has decided to suspend the process to help its customers. This means that no individual will have their purchase interest rate increased, until at least June, because their risk profile changes," said Barclaycard in a statement.
The firm has also set up a new helpline for customers who are concerned about debt
and will be contacting customers who are showing potential signs of financial difficulty, before they miss payments, to offer support and debt advice
Mr Jenkins said of the announcement, "it will assist millions of our customers and we are determined to support them further, in innovative ways, over the coming months."
Barclaycard may be bucking the trend by reducing rates – most firms are still raising their rates – the average UK credit card rate is more than 10 times the Bank Rate, but even with the cuts, Barclaycard’s "flagship" cards are still more than eight times the base rate.
However, Barclaycard’s decision to cut rates is clearly a step in the right direction – especially in light of new figures from the Post Office that show more than 10million people are having to rely on their credit cards for day-to-day living expenses.
Moneysupermarket.com has praised Barclaycard, calling the firm an "innovator with credit cards," and urging other credit card companies
to follow suit.
"Barclaycard has the largest stable of cards suited to the widest range of customers - and it has again shown market leadership here by becoming the first major provider to come out with such a commitment," said the site’s credit card expert, Peter Harrison.
"In an environment of falling mortgage
and savings rates
, card providers had been strangely quiet until now.
"A copycat commitment from other providers would be most welcome."
© Fair Investment