Chip and PIN conversion costs blamed as IF drops credit cards

Chip and PIN conversion costs blamed as IF drops credit cards

UK Internet bank Intelligent Finance has scrapped its credit card offsetting system and served notice to cardholders because of the high costs of moving to Chip and PIN technology.

IF, a standalone subsidiary of Halifax Bank of Scotland (HBOS), has given its 70,000 credit card customers four weeks notice to repay outstanding balances or move to another provider.

Nick Robinson, managing director of IF, told BBC Radio 4's Money Box programme it has become too expensive to run the card any more.

"It has become uneconomical for small card players like ourselves to operate their own IT systems," he said. "There are massive economies of scale and things like Chip and Pin have served to accelerate that."

The move has angered customers who use IF's heavily promoted offset facility to reduce monthly interest charges by setting balances against credits across their accounts.

The remote bank is coming under increasing pressure from high street parent HBOS to improve its margins. The bank recently dropped the offset facility for personal loans and slashed interest rates on current accounts in a further effort to strip out costs.

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