Tandem Discussion & Feedback

There are a few ‘facts’ in the above post, but no indication of where they’re from. Do you have any references? I’m genuinely interested, as these statements run counter to my vague understanding of the UK financial market, so I’d appreciate anything that can correct any false assumptions I have.

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60% of people who have credit cards pay off the total balance each month.

This aligns with what I’ve heard from various sources so probably reasonably accurate. The remaining 40% pays somewhere between the minimum and the full balance.

I suppose one should also assume that some of these are on some sort of promotional deal.

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Wow, thanks. I’d always assumed that more than 50% carried a balance forward. It’s a pretty unpalatable product when looked at that way: 40% of people paying the costs for everyone. :neutral_face:

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One example on overdraft fees is https://www.finder.com/uk/overdraft-fees which shows the differences in age demographics and regionally.

And as has been said

Around 60% of people who have credit cards pay off the total balance each month.

From https://www.moneyadviceservice.org.uk/en/articles/credit-cards

That’s not to say some people don’t live in their overdraft/on cards etc but they are the minority.

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That’s the wrong way of thinking about it. The credit card firms make money even from customers who pay balances off each month due to interchange/retailer charges

The money advice 60% is actually a wrong quote, that in turn gets requoted.

It’s 60% of the population have a credit card. The actual number is around 80%, I’ll find the doc.

UK Cards Association

Around 80% of all credit and charge card spending in 2016 was repaid in full every month. The proportion of balances that bear 0% interest or are repaid in
full before the end of the interest free period increased from around 19% in
2002 to 45% by the end of 2016

Around 51 million adults in the UK (96% of the
population) have a debit card. Around 32 million adults (60% of the population)
have a credit card.

http://www.theukcardsassociation.org.uk/wm_documents/UK%20Card%20Payments%202017%20-%20Summary%20FINAL.pdf

After 2017 UK Cards Association became https://www.ukfinance.org.uk

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To those who wish to try to compare their 1.5% saving offer is like purchasing a kids magazine for £5 which comes with a free toy worth only £1 and trying to claim they purchased a £1 toy for £5. It is a crazy comparison as you need to look at the total package.

With the 0.5% cashback, they are not going to be making any money especially with the interchange rates have fallen below the 0.5% cashback rate. These new EU rules came in after the lunch of the Tandem credit card offers, so it is no surprise they have now decided to review their product line.

They could simply keep the package but abolish the 0.5% rate, but their new offering would be identical to their Journey Card and does not make any commercial sense having two similar products on the market. You may argue the Journey card offers an interest rate on purchases of 24% but according to their FAQs pending on your credit rating interest for this product can be as low as 16%

Then the argument that they can simply transfer customers over to this Journey card product, the chances are this is a product being supplied by a third party and Tandem are simply distributors (The terms and conditions for this product are different). It has been explained by the CEO on twitter that due to system limitations they are not able to transfer customers over to this product.

As Tandem is a newcomer to the market, it is more than likely the number of customers paying off their card at the end of each month far exceeds the reported average 80%. It could be the case Tandem only makes money from 15% of customers who in return is paying the operational expenses for the other 80-85% of customers. It looks as if Tandem has decided to focus on this 15-20 % of customers, offer them a fantastic deal at the expense of the 80%.

With credit card rates increasing from 15% to 25% in the last few years (I have an old Cahoot credit card still unchanged at 9%) and bank overdrafts increasing to 40% on average, Tandem £5.99 offer could be considered is very attractive indeed to the 20% of customers who do not pay of their credit cards off each month but wish to spread the cost of their purchases…

IF it is the case that most credit card companies only make money from the 20% then it won’t be long for other credit card providers start to follow the example of Tandem.

For a lot of us, we only use our credit cards if we desire to pay off our purchases over several months.

It’s not the case.

Your use represents a valid minority but there usually other cheaper ways of financing purchases including 0% cards

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Not from some reports I have read.

Why do you think Tandem decided to withdraw their product?

Vast majority of us at some point in our lives will borrow money most will take small loans but with Tandem new product is ideal especially for the 20% and an alternative to these small insecure loans offers.

0% cards are only evaluation and taking out multiple 0% cards can have a massive hit on ones credit rating. You have not really come up with an alternative to Tandems new product offering…

Looks to me as if they have had trouble raising new funds from venture capitalists - certainly less then they expected.

Also, they appear more interested at the moment in expanding overseas, so I would guess the reason for closing the credit card is that they don’t have enough capital to maintain the size of their userbase and fund their plans.

If you search YouTube you will actually find their CEO promoting cashback cards and encouraging people to pay it off each month.

I suspect the continuous borrowing on Tandems new product is going to considered poorly by other lenders when it comes to further borrowing.

As for applying for 0% credit cards… not sure what you mean by evaluation in this context but why would you apply for multiple cards at once unless you have a debt problem?

As for an alternative - have got tried saving and budgeting for things and/or living within your means? As this is the Monzo forum, perhaps use pots…

Having said that, you can get loans for less than 3% from firms as well.

Tandems new product offering seems to be largely for the financially illiterate or lazy imo.

Looks like Ricky Knox has joined the Monzo community.

It’s really not. Or, at least not automatically.

If, for a given level of borrowing, the £5.99 works out cheaper than the interest the customer would be paying elsewhere then it maybe an acceptable way to borrow. The problem is that as they pay off the debt the interest rate effectively rises (since the charges remain the same) making the whole experience less and less sensible the smaller the outstanding balance gets.

This should not be taken as advice to then borrow more so as to keep the apparent interest rate down!!!

If the customer ends up borrowing nothing at any point in time then the fixed fee approach is simply a crazy idea.

It is clever, I’ll give it that, but it really, really isn’t a good (or economically sensible) way for the majority of people to borrow money.

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I’m not so sure. I wonder how long it will take for the FCA to clock it, being that it flies in the face of current ‘fair’ practice for no monthly or daily fees for borrowing. (I know that is for overdrafts, but the logic that the FCA claims is that these obfuscate the real cost of borrowing and this surely applies here?)

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Annual fees on credit cards are not unheard of, just most give you something for it, but still charge your APR.

The FCA regs only scoped current account overdrafts, not credit cards.

I find it curious that with less than a month before my card is turned off, I litterlly have had no in app notifications at all, not even a banner in app when I log in. relying on an alone is going to cause them all sorts of grief with customers who failed to read it for one reason or another. And 99% of customers are not as up to date as us forum users won’t have seen it if they failed to see the email.

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When annual fees are charged, it is reflected in the ‘Representative APR’ figure shown (they are ‘artifically’ high).

From memory, as Tandem is calling this a membership fee - it’s bypassing this and advertising it as 0% card.

As @j06 says, I expect the regulators will not be impressed by this.

Isn’t this the point? They can remove the card for new users but keep it for old ones, even if they do choose to remove the cashback. Cancelling the card outright is unusual.

To be fair, they are showing it as a representative APR of 6.37%.

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They have to show membership fees within the APR. My Amex card has an APR of 76% but 22.9% for purchases.

Only a few weeks left, is anyone sticking with Tandem?

Not a chance!

Not me. Got the barclaycards reward with .25% cashback.

Not as good ovi but still something for when I wanna use CC and can’t pay with Amex.