Students ‘being tempted into debt’

My 18-year-old son, who does not have a job and is still at school, has received pre-approved credit card offers from “reputable” companies such as Mastercard and Capital One in the post. Is this legal?

How can I remove him from card company direct mailing lists? I intercede when the letters arrive to prevent my son from accepting these dangerous offers, but am concerned one will get through and he will be in debt just as he begins his life as an adult.
Name withheld

You are not allowed to send credit card offers to under-18s, but once someone is an adult there are fewer rules. As Citizens Advice warned this week, credit card companies are
not wont to encourage sensible spending, with a large number increasing credit limits automatically, even for those with thousands of pounds of debt outstanding.

Snail mail is probably the least pervasive way in which our reader’s son is bombarded with adverts for “easy” credit, from payday loan ads on every channel, to footballers wearing shirts advertising gambling companies (nine Premier League teams now, compared with zero in 1997). Stopping him receiving them is unlikely to make much difference, but these letters are revealing of how young people are being actively encouraged into debt.

Two of the letters, shown to me by our reader, were from Cashplus and Capital One offering cards designed for people with a poor or non-existent credit history. They quote APRs of 39.9 per cent and 34.9 per cent. These, says Andrew Hagger of Moneycomms, are the best rates on offer, so “they could be much higher. This typical rate only has to be offered to 51 per cent of accepted applications.”

Cashplus’s letter states: “We really want you to carry our credit card, even if you’ve never had a card before or had credit problems in the past. In fact, you’ve already passed our eligibility screening.”

The Capital One letter reads: “If you’re trying to improve your credit rating our classic card could help. Easy to manage credit limit from £200 to £1,500. Apply now.”

Capital One states that its letter is not a pre-approved offer: “A full application has to be undertaken and we conduct an extensive creditworthiness assessment, including a review of income and credit report,” says a spokesman.

Cashplus says: “We have strict policies in place when issuing credit cards, especially in terms of affordability. Any mailing list used is sourced directly from the credit bureau, which contains an opt-in for the individual to receive offers.”

It says anyone submitting an application who is unemployed would not be accepted. Both card companies say the best way to opt out of these letters is to contact the Mail Preference Service.

No joy over joint account

I have a joint HSBC bank account with my ex-husband. It is more than £3,000 in debt.

At my divorce hearing in June the court ordered that the account be closed, with each party paying off 50 per cent of the debt. I am debt averse and wish to clear it. My ex-husband does not feel the same.

I have been to my local branch and produced a copy of the court order. I was told the bank cannot close a joint account without the agreement of both parties. In the meantime, interest is being added to a debt that I do not want and wish to clear. Is there anything that can be done?
Name withheld

In these circumstances you might hope the bank would take a view and temporarily freeze interest, but HSBC is pretty strict about accounts in two customers’ names.

A spokesman says: “Our joint accounts are designed to ensure all parties have an equal responsibility, which the couple agreed when opening the account. Any change in account ownership or the freezing of the interest has to be agreed by all parties.”

I’m told there is no joint product on the market that would split the account, even after a customer has a court order. HSBC says it has made a conscious effort to “streamline the separation process” for customers, but if your ex-partner won’t comply with paying off a debt you’re stuck.

You may be able to get restrictions on the account, so that your ex cannot run up further debts, but your credit rating and ability to borrow in future will still be damaged if the other persion continues to refuse to clear what is owed. Bryan Scant, a solicitor on the family team at Coffin Mew, recommends you take your ex to court or consider enforcing the order. “You could re-pay it yourself for the sake of clearing it and then you could apply to the court for an order that your ex-husband pays you the money you are owed [with interest]. Also, when applying for an enforcement order the court will often order that your ex-husband has to pay your costs.”

Harrods turns Tandem

Harrods Bank advised customers in September that Tandem Money Limited would take over the bank from December 1, 2017. I do not want to have accounts with Tandem, it being a start-up, digital-only bank.

Harrods Bank refuses to let me break my fixed-rate savings contract, however, because these are for a set term. I deliberately do not deal with any digital-only deposit takers, let alone one I have not heard of. Surely customers have a right to object to their money being transferred without their consent?
Sylvia Watson, via email

The 124-year-old Harrods Bank, despite its venerable branch location on the second floor of the department store, has not been doing well.

Tandem bank, which promises great customer service, has stepped in, taking over 100 per cent of Harrods Bank with an injection of £80 million capital. This is subject to regulatory approval. If it is granted, Harrods’ customers will be moved to Tandem, with the same terms and conditions.

This is not all bad news. Tandem should offer decent interest rates and once regulation is in place customers will have savings of up to £85,000 protected by the Financial Services Compensation Scheme.

A spokeswoman for Harrods Bank says: “The bank is and will remain regulated by the Prudential Regulation Authority and the Financial Conduct Authority. As Ms Watson mentions, the terms and conditions of her fixed-rate deposit are unchanged and the interest rate is fixed until maturity. Ms Watson will be able to call us and we will write to her before her fixed-rate deposit matures setting out her options.”