UK card issuer Barclaycard has revealed that its early assistance initiative for cardholders facing financial difficulties has achieved the milestone of helping 6,000 customers. In the current climate, there is an increasing need to resolve these issues quickly and efficiently in order to boost the profitability of issuers' loan books. To this end, other issuers should follow Barclaycard's lead.
Launched in March 2009, the new scheme follows on from the establishment of Barclaycard's customer helpline in February this year. According to Barclaycard, its combined schemes have so far helped 11,500 customers and the company will be issuing statement inserts to a further two million customers to raise awareness of the service. The issuer will contact targeted customers and invite them to discuss their situation with one of its debt advisers. Where a customer does need help, Barclaycard will offer practical aid and advise customers where they can turn for help if they are concerned about their total borrowing.
The economic climate remains unstable and unemployment has reached its highest level in 13 years. As such, there is a risk that many cardholders will find it difficult to maintain repayments on their card balances and there is a stronger chance of accounts going bad. According to Datamonitor Financial Services Consumer Insight research conducted in June, 13.5% of UK credit cardholders made only minimum payments and 2% did not make any payments at all. These customers are among those who pose risk to issuers, and their accounts constitute a significant chunk of portfolio in terms of volume. For this reason, there are lessons to learn from Barclaycard in dealing proactively with those consumers who are struggling to meet their repayments.
Antony Jenkins, chief executive of Barclaycard, stated that it is equally important that its customers have the right amount of available credit and pay the correct price on their borrowings. To this end, Barclaycard will also be taking appropriate repricing actions in the second half of the year. These entail a limited number of price rises where Barclaycard has a clear indication that potential risks have increased (although around three million cardholders will benefit from reduced rates). These combined initiatives form an instrumental part of good account management and serve as an example to other issuers. That said, customers must want to take part as much as issuers for this to work effectively.