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Labour hits supporters with credit card charge of 18.9% – two-and-a-half times that of market's most competitive option
02:04 GMT, 30 December 2012
Costly: Labour supporters will be paying through the nose in interest charges on their party's credit cards
All three major political parties are profiting from credit cards that charge their supporters exorbitant rates of interest.
Both Labour and the Lib Dems offer a card charging interest at nearly 38 times the Bank of England’s 0.5 per cent base rate – and more than two-and-a-half times that of the market’s most competitive card.
The card, provided by the Co-operative Bank, charges a standard APR of 18.9 per cent – although richer supporters can have a premium card with a fixed rate of 11.9 per cent for five years.
Between them, Labour and the Lib Dems have 11,500 card customers – 8,500 with Labour – and the majority have been issued with a standard card. Labour claims to have made 2 million from the cards.
The Co-op gives the party 15 for every new account. If the card is used within the first six months, Labour receives an additional 2.50. For each 100 spent, the party pockets 25p.
The Lib Dems cash in by the same amounts with their Co-op credit cards.
The Conservative Party credit card levies a standard 16.9 per cent, more than 33 times the base rate. It has attracted only 100 customers and is being phased out, according to MBNA, which issues the card.
Supporters of all three parties could pay just 6.9 per cent interest with a Sainsbury’s Bank credit card, which is the lowest rate on the market.
All three parties have previously criticised banks for imposing high rates of interest on customers who cannot afford repayments.
But Joanna Elson, chief executive of the Money Advice Trust, said the parties themselves were adding to the problem with their cards.
She said: ‘People have had to borrow on their credit cards again to fund this year’s Christmas. It adds a lot of pressure and isn’t sustainable.’