Big changes are coming and no one yet knows what the UK will look like outside the EU, but are credit cards already starting to disappear from the market as a result? Is time running out to secure a good credit card deal?
News broke at the end of January that Saga is planning to withdraw its popular Platinum Credit Card. The travel credit card reportedly offered customers fee-free foreign transaction purchases, 55 days of interest-free cash withdrawals and exclusive discounts on Saga holidays and cruises. Cardholders have until 28 March 2019 to pay off their balance, the day before Brexit comes into effect. A coincidence?
Is it a direct result of Brexit?
Saga states that the reason behind its decision is that it is ending its long-standing partnership with Allied Irish Bank (AIB), which is the provider of the Platinum Credit Card. The reality is that AIB is headquartered in Ireland, which remains in the EU, while Saga is a UK company – and past 29 March 2019, the UK will no longer be part of the EU. However, Saga itself says that its decision is not related to Brexit.
It is also telling that it is a travel credit card that has been withdrawn. If Britain leaves the EU without a deal in place, one of the likely knock-on effects is the increased cost of cross-border transactions, as UK card providers will no longer have access to central payment structures such as TARGET2 and the Single Euro Payments Area (SEPA). It could, therefore, be the case that Saga decided that offering fee-free foreign transactions would no longer be cost-efficient in a post-Brexit environment.
Is this a sign of things to come?
The question is, then, whether this is the start of attractive credit card deals disappearing from the market because of Brexit. There have yet to be any other announcements of cards being withdrawn from the market, and you could take Saga at face value that its agreement with AIB was always going to reach its natural conclusion on 28 March 2019.
It is rare for deals to be withdrawn entirely and consumers asked to repay their balance within a definite time period. Travel credit cards are the most likely to be affected by Brexit, because of the above-mentioned reason of increased costs associated with cross-border transactions; there have been no other indications that deals are becoming less attractive in this area.
Credit card deals as a whole have been disappearing over the last 12 months, but not as a result of Brexit. The Financial Conduct Authority (the city watchdog) warned that consumers were becoming too reliant on cheap debt and encouraged credit card providers to ensure their customers paid back their debt as quickly as possible, which has led to a number of the lengthier interest-free deals disappearing from the market. Uncertainty surrounding Brexit and a potential downturn in the economy could lead to greater concerns over levels of debt, which in turn could lead to more offers being withdrawn.
Should I act now?
If there is an attractive deal on offer then there is little harm in taking a card out now, beyond the usual caution surrounding taking out a credit card. But I don’t think we need to panic. Credit cards are unlikely to disappear altogether, and providers will still aim to offer competitive deals in order to attract new customers. Just make sure you compare offers in order to secure the best deal for you.
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