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*Up to 70% interest - credit card aimed at the poor**Patrick Collinson*
*Saturday February 12, 2005*

*Guardian*

A new credit card aimed at millions of low-income families is to charge 
interest at up to 70% - the highest ever charged by a credit card company.

Marketed under the slogan: "Stay in control of your budgeting", the 
typical interest rate on the new Vanquis card will be 49.9%, but for 
some customers the company judge as high risk, it will be 69.5%. MPs and 
debt campaigners yesterday condemned the rate, which is 15 times the 
Bank of England base rate and triple the standard rate on other cards. 
The card also has an annual fee of £19.

Norman Lamb, Liberal Democrat MP for North Norfolk, who recently 
completed a Treasury select committee investigation into credit cards, 
called the rate "staggeringly high". He added: "People on a low income 
tempted by it need to be given a clear financial health warning." Debt 
on our Doorstep, an umbrella group that includes Oxfam, credit unions 
and Church Action on Poverty, said: "It's an absolute disgrace that 
Vanquis should even be suggesting people borrow money on a credit card 
at that rate."

Vanquis is a subsidiary of Provident Financial, the biggest doorstep 
lender in the country, and is the subject of an industry-wide 
investigation by the Competition Commission into the home credit market.

To find customers, Vanquis will trawl through the files of private 
credit rating agency Experian - it holds data on almost everyone in 
Britain - to identify individuals rejected by other lenders often 
because they have run into debt problems in the past.

It expects the typical customer to have an income of half the national 
average. Provident Financial's executive directors last year earned from 
£376,000 to £583,000, while the chief executive saw his pension fund 
rise from £916,000 to £1.3m.

Vanquis managing director Les Stillwell yesterday defended the national 
launch of the card, which was successfully piloted in part of Scotland 
last year. He said: "The big problem with credit card lending is not the 
interest rate but the amount of credit that is granted. We are only 
looking at that part of the market where we can lend responsibly.

"People will have to have an income of at least £5,000 a year, and will 
be given a credit limit starting at just £150. If they keep their 
payments up, the rate will be reviewed, typically falling by 3-4% a year."

But Debt on our Doorstep said it will now increase pressure on the 
government to amend the consumer credit bill to include a clause 
allowing the government to impose a maximum interest rate cap.

Guardian Unlimited © Guardian Newspapers Limited 2005