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Keep meeting lenders who like to say NO? Then consider Vanquis.
Vanquis Credit Card
Member Name: spartakmoscowfan
Vanquis Credit Card
Date: 08/05/06, updated on 09/05/06 (7987 review reads)
Advantages: Excellent customer services. Responsible use can help in repairing your credit rating.
Disadvantages: Extremely high APR on basic level card. You may feel a stigma attached in producing one to pay with.
I lost my job after becoming ill with depression back in the late 90s. With my lost health went not only my self esteem, but my previous good credit history I'd established over the years, as through my loss of income went my ability to meet my contractual payments on an existing personal loan and a credit card and in turn, I had to offer my creditors much lower monthly instalments than I'd originally agreed to and my credit rating was adversely affected as a result.
Having eventually recovered and got back into work, I found I'd become about as welcome as Saddam Hussein at a White House garden party in terms of being able to obtain things like a bank account with a cheque card, or a credit card with a mainstream lender. Although I was paying my debts to my creditors via arrangements with the Consumer Credit Counselling Service and had no CCJs, my credit history, since becoming ill, was now sufficiently poor enough for potential creditors to turn me down as soon as look at me. Essentially, I was knackered.
Vanquis asks to come into my life:
It was around this time that I received a mail shot from Vanquis Bank for a newly launched credit card, called a Vanquis card.
I was immediately wary of this card, as I'd recently read about Provident Financial PLC being behind Vanquis Bank. I remembered the TV adverts I'd seen as a child for the old Provident cheques system back in the early 70s. These were cheques generally used by poorer people that exchanged them for goods at retailers who deigned to accept them. The resultant interest those people had to pay back (to Provident door-step collectors) was said to be extremely high. Currently Provident Personal Credit offers loans of up to £500 (payments collected at the door) at a typcial APR of 177% - that's right, 177%. I'd also heard that Provident Financial was involved with the former Yes Car Credit (a company selling used cars, targeted at people with credit problems). Anyone who'd seen reports about Yes Car Credit's sales methods featured on shows like Watchdog may well have some serious concerns about the way they'd allegedly treated some of their former customers.
Still, I really didn't have much choice other than to apply. I'd tried everywhere else for a credit card and the only other lender to seriously consider me was Capital One, who'd wanted a £200 security deposit for a £200 credit limit card with an APR of around 29% - an offer I politely declined to pursue further. Modern day life can sometimes be difficult without access to a credit card. It wasn't credit per se I wanted. It was more about if I ever needed to hire a car or a van. I'd found this virtually impossible to do without a credit card. I did have a Visa Electron debit card, but these are still not universally accepted as a means of payment in high street shops and online retailers. A credit card would also be very useful for those types of purchases, so with all this in mind I bit the bullet and applied.
Applying was relatively straightforward. The amount of personal details asked for was much less than for a standard credit card request with a low APR. The promotional literature re-assured me that I "mustn't worry" if I'd been turned down elsewhere and that Vanquis would still 'consider me'. Though, with a quoted typical 39% APR for purchases and cash withdrawals and an initial credit limit of just £250, I'd have been surprised if I wouldn't have been very seriously 'considered' by them. 39% APR is one hell of a horrific interest rate level - particularly when it is one being directed at those perhaps more prone (the 'sub-prime' borrower) not to pay the balance off in full each month. Vanquis justify these high rates by quoting the 'risk factor' they take on by dealing in 'sub-prime' business and how they offer these kinds of customers an opportunity to 're-build' their credit rating - a chance they wouldn't normally get and of course, beggars like me, cannot be choosers.
After about two weeks or so I received an envelope back from Vanquis. Inside was a letter telling me I'd been accepted and my Vanquis card was enclosed. I now had to telephone Vanquis and activate the card. I'd been given the aforementioned £250 credit limit and APR of 39%.
Living with Vanquis:
In fairness, I have found Vanquis Bank a decent company to deal with.
Their customer service centre is UK-based and generally very helpful and waiting times to get through to an advisor seem generally low. You can also use an automated menu system for things like checking your balance.
I previously imagined that as a member of the 'sub-prime' species, I'd have been talked down to by their staff and generally treated rather shabbily. I was mistaken. I have been treated more courteously by Vanquis customer service than I was with more mainstream lenders when I was a 'prime’ creature.
Using the card and paying for it:
The card is a Visa one. It is widely accepted and quite cleverly and tactfully, the word 'Vanquis' fails to appear on the front of the card itself. All you see is ‘Visa’ with the word 'Vanquis' appearing in microscopic print on the reverse side of the card. Even so, I still feel somewhat sheepish producing my Vanquis Visa for payment. Far more so than I would do if could snootily wave a Coutts World card in the air to all and sundry!
As I said earlier, I was only given a £250 limit, so I was hardly going to paint the town red with it. I have been careful not to use it to withdraw cash with, as I don't want to risk incurring any instant interest charges. Hence, I use the card purely and simply to make purchase transactions with. Doing this allows you up to 56 days interest free credit, as long as you clear the previous balance in full each month.
You can pay your Vanquis statement using direct debit, at a post office or via a bank, by post, or over the phone direct to Vanquis - the method I use.
Upside of Vanquis?
Being given a credit card after so long without has given me a sense that I am on the road to at least some sort of recovery in getting credit again and then using it responsibly. Without the likes of a Vanquis out there, I would have had little to no chance of getting a credit card for some years more and that can make you feel like a second class citizen in financial terms.
If you ensure you pay off your balance in full each month, then you cannot go far wrong as far as I can see.
Using the card in this way will start to have at least some degree of positive impact on your credit rating, as it will start to show future potential lenders who carry out a credit search on you that you are using a credit card correctly and sensibly by making your payments on time.
Vanquis says that it regularly reviews your use of their card and if used responsibly, will apparently consider lowering your APR and increasing your credit limit (you can ask them to lower it again, should you not want this). I have had the card for six months now, and neither of those options has been offered to me so far.
Vanquis also says that "from time to time" it will send you out some Vanquis cheques (to a pay a tradesman with, for example - interest rate and terms as per cash withdrawals). They have yet to send me any of these.
Downside of Vanquis?
The annual fee of £19 I (and presumably others) have to pay seems quite an extreme and unfair charge to make for a card with such a high level of interest rate. Saying that, for a customer like me who pays off the balance in full each month, that is the only money (so far) they will make out of me.
If you fail to pay off your balance in full each month, you will end up potentially paying horrendous amounts of interest to Vanquis over the longer term. Equally, if your credit limit is also regularly increased by them and you only make minimum payments (5% of the balance), there is the potential to end up in a serious amount of debt (the very thing you should be trying not to repeat), so be warned on this.
I would recommend a Vanquis card to those people who cannot find a credit card elsewhere and who want one with a small credit limit and to repay it in full each month in an attempt to improve their credit rating by demonstrating responsible use of a credit product.
I could not recommend the card to those who feel they would end up paying Vanquis less than the full balance each month. Not clearing the balance each month on a card with such a high APR could end up with a person getting into serious financial difficulties over time, with them adding significantly to their existing levels of debt.
So, on balance, I'd recommend the Vanquis card overall, but with the aforementioned reservations. Its a good product in the hands of the right people. In the wrong hands it is potentially a tool to add to people's debts, compounding the financial problems they already have and Vanquis needs to be very careful about increasing their customers' credit limits as a matter of routine.
Finally, I have spotted that Vanquis appear to have done a re-branding of their credit card product since I got mine. They now offer the 'Abacus' card at a rate of 39.9% APR (for people new to credit or with more serious credit history problems (defaults and CCJs)), the 'Blue' credit card at a rate of 29.9% APR and an opening limit of up to £2000 (for people with less serious past credit problems) and the 'Gold' credit card at a rate of 19.9% APR and an opening limit of up to £2000 (for people who "deserve a credit card with a good APR, but a major lender has turned down" - tenants, self-employed etc.)
Summary: A viable option for a credit card for those with past credit problems looking to make a new start