In recent times the credit card industry has done little to encourage customer loyalty, preferring instead to pursue new customers with a wide range of enticing introductory deals, such as 0% balance transfers, 0% purchase or enhanced introductory cash backs.Meanwhile, existing customers were largely ignored and, unsurprisingly, the credit worthy ones decided to take advantage of these deals and switched cards on a fairly regular basis.

Against this backdrop Capital One has announced an initiative which is a genuine attempt to engender loyalty within its current customer base, as well as an initiative designed to win new customers.

By registering online, Capital One’s credit card holders will get free email alerts from Equifax notifying them of any key changes on their credit file. This will include details, within 7 days, of any applications for credit that have been made with or without their knowledge. They will also get two free full credit reports each year.

David Black, Principal Consultant for Banking at Defaqto said: “Credit card providers are facing testing times at the moment with impairment losses, capped default charges, the credit crunch, pressure on payment protection insurance sales, a highly competitive market and uncertain economic conditions all stacking up against them.

“I’m genuinely impressed by Capital One’s introduction of a free identity alert service which differentiates their cards from the opposition and should encourage customer loyalty.

“Looking forward, I would expect to see further examples of added value services or facilities appearing from other credit card providers. These could take the form of linked incentive accounts, more valuable incentive schemes or specifically targeted offers at niche market segments. The rationale is simple: encourage credit card loyalty by offering something worthwhile as a possible prelude to the later introduction of annual charges.”

Black added: “The current account market has seen the widespread promotion of paid for added value accounts, and it is possible that we are about to see the emergence of a similar phenomenon in the credit card market.”

-Ends-

Notes to editors

Credit reference agency services - What are they worth?

Equifax

• Equifax sell a broadly similar service for £3.99 per month (£47.88 per annum).
• Premium services are also available.
• Equifax offer a 30 day free trial for unlimited access to credit reports and email alerts within 24 hours of any change which will then be charged at either £7.50 a month or £69.99 for a year.

Experian

• Experian also offer a 30 day free trial for a similar service which will then be charged at £6.99 per month.

Callcredit

• Callcredit’s service is the least expensive at £44.99 a year for and, like the others, they also offer a 30 day free trial.
• It is also possible to buy a copy of your credit report from any of the three credit reference agencies by sending them £2.

Credit Card Incentives

• 65.8% of credit cards currently offer 0% introductory purchase deals.
• 71.7% of credit cards currently offer 0% introductory balance transfer deals.
• The average fee for a 0% introductory balance transfer is now 2.72%.
• 61.2% of credit cards currently offer both a 0% introductory purchase rate and a 0% introductory balance transfer.
• 7.8% of credit cards currently offer cash back on spending.
• 5.5% of credit cards currently levy an obligatory fee.

For further information contact:

Defaqto Limited
David Black, Chris Johnston or Luci Mylward
01844 295 454