With Ulster bank changers taking a credit card hit, it might be worth asking if you can do without your expensive plastic helper

Many of you find the transition difficult and find that it’s not quite as easy as all those ads make it out to be.

I’ve had a lot of requests from people who not only thought it would be a hassle-free process, but that with their checking account switching, everything else – deposits, direct debits, overdrafts, and their credit card – would switch seamlessly too.

But that’s not how it works. In fact, I’ve found that after 30 years of pristine record-keeping with a credit card, I diligently pay back on time every month and have been turned down three times, for one at my new bank. Of course, it’s entirely possible that the “good” customer they want is the one who doesn’t pay on time and instead collects a lot of profitable interest.

For my fourth application (I don’t actually need a credit card, but I have the dentures in my teeth now) I modified the form. I put in “employee” (a lie) instead of “self-employed” (the truth), and lo and behold, my application was approved immediately.

One man I spoke to found that his disability worked against him. His welfare income was rejected as inadequate, despite years of solid credit from Ulster Bank.

The truth is that you are not entitled to any credit. Algorithms are at work here and the bank can choose its customers.

It’s a commercial decision whether a bank deems you good enough, sound enough, or worthy enough to get an overdraft, loan, or credit card.

KBC Bank has reached an agreement to transfer its credit card customers to Bank of Ireland as part of its overall migration with the same limit as currently.

For former Ulster Bank customers – a far larger cohort – they will find that their past records count for little when they switch providers and need a credit card or overdraft.

It’s not a very festive message to send, especially given the number of people who have yet to move, many of whom will finally be able to do so in the dog days between Christmas and New Year’s.

The central bank says: “If you currently have an overdraft with KBC Bank, or a credit card and overdraft with Ulster Bank, these will not be transferred to your new provider if you move your banking arrangements.”

She further advises: “If you need a credit card, you have to apply for it from a new provider (whether it be your new bank provider or another credit card provider). Similar to an overdraft facility, you must provide credit check information as part of your application. You may not be eligible for the same credit card limit that you had with your old provider. There may also be a waiting period while your application is reviewed. You should take this into account to ensure you have enough time to apply for a new credit card before closing your existing account.”

It says it “actively collaborated” with the banks on the account migration and made its “expectations clear.”

However, the truth is that you cannot force a bank to give you a line of credit if they don’t want to.

More people use credit cards in the run-up to Christmas than any other time of year, so those bills that land in January need to be settled if you’re hoping to switch.

For anyone currently paying high interest rates, moving your balance to 0 percent is a good idea, but they too could run into the same issues when applying for a new card.

I dropped my application. I really don’t need it and I hate bad service. You might discover the same thing if you analyze it.

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Questions to ask

Do you really need a credit card? With your 16-digit debit card, you are well prepared for all online and in-store purchases.

When you find yourself using your credit card regularly, ask yourself why? Is it simply a comfort blanket to reassure you that you have access to credit just in case, or do you constantly use it as a life raft, which could indicate you have a budget problem rather than a loan extension.

The only purchase that still really requires a credit card is to rent a foreign car. These companies use it as an additional insurance policy in case you damage the car and they have trouble getting you to pay. For everything else there is a debit card.

Using a credit card is not free, even if you pay on time and in full.

A stamp duty of €30 is due every April and most banks are now looking for new applicants to pay off loan bills from their checking account by direct debit each month. If you can afford it, you don’t need the card.

With interest rates ranging from an expensive 13.5 percent (AIB, Click) to a staggering 26.6 percent (BOI, Aer Card), financing your purchases this way is always expensive.

How interest is calculated

There is a lot of confusion and quite a few myths about how and when interest is charged on credit cards.

According to the Competition and Consumer Protection Commission (CCPC), it depends on how you use your card.

“If you pay your bill in full before the due date, you won’t be charged any interest,” it says.

However, the interest-free purchase period varies, and while it is usually around 56 days, this may not be the case for all banks. In any case, purchases are treated differently than cash withdrawals, which immediately spike interest rates at ATMs.

Although banks only ever ask for a “minimum payment”, there is no statutory minimum payment. The common demand is 2-5 percent of the bill, but that makes it incredibly difficult to ever pay off a debt efficiently.

For example, a debt of $3,000 at an APR of 22 percent would take four years and four months to pay back a minimum of 3 percent on each bill without new purchases being required.

If you only pay part of the bill, “you will be charged interest on all your purchases from the day you bought them,” the CCPC warns. That means no grace period at all.

So if you owe $1,000 on your bill and you pay back $900 by the due date, “most providers will charge you interest on the full $1,000 until your payment hits your credit card account. After that, you will be charged interest on the remaining €100 and on all new purchases.”