You've got mail

by Sarah Modlock

23 February 2005

This time last year, retired taxi firm owner Gerry Ranger was revealing something very large to the world. Following an experiment to see just how much junk mail he received in a year, he produced a 70lb mail mountain. The 701 items stood as a 37 inch-high tribute to Britain's hugely annoying direct marketing industry.

Someone, somewhere must respond to this rubbish. Why else would McDonald's be sending a booklet to 17 million homes across Britain to promote its salads. The Conservative Party posted 11 million leaflets outlining its policies after the party conference and New Labour is jumping on the bandwagon to 'personalise' the coming election via your front door. Even London's call girls have moved their advertisements from telephone boxes to letter boxes.

A quick straw poll of friends and family showed that no one responded to junk mail and yet, according to the Direct Mail Information Service, it leads to average sales of £577 per person per year. Astonishingly, profits from junk mail campaigns exceeded £26bn in the UK last year - £11 is generated for every £1 spent.

Cheque mate?

Among the Mr Ranger's items were 33 charity appeals, 42 credit card applications, 48 clothing catalogues or adverts, 30 insurance applications and 84 holiday and car brochures. Mr Ranger said if he had responded to all the 'dodgy' prize draws he was sent he would have had a chance to win eight cars and a total of £3,355,000 in cash. 'But it's the credit cards that annoy us most of all,' he said.

I'll go one better and nominate credit card cheques as the most irritating unsolicited post you can get.

Credit card cheques look almost exactly the same as ordinary bank account cheques. Card issuers obviously hope the familiar style will encourage people to take advantage of them. They can be used in the same way as traditional cheques, even in places where credit cards are not accepted. But they are not so much convenient cash as fool's gold.

If you have ever had to withdraw money using a credit card then you will know that in addition to a special fee, you will pay considerably more than the usual rate of interest for purchases. Credit cards cheques are usually charged at the same rate as cash withdrawals. A study by website Moneysupermarket found that many leading credit card providers, including Barclaycard, Lloyds TSB and Halifax One, charge an APR in excess of 20% on any purchases made using a credit cheque. MBNA charged just over 18% and HSBC charged the same as its card purchase rate of 15.9% - not exactly low.

Licence to print money

You will also pay an immediate handling charge of between 1-2% plus a minimum fee of around £2 per cheque. With most lenders, you will also be charged interest immediately instead of the having the 45-59 day interest-free period given for purchases. Use them abroad and costs will be added for currency conversion.

As if all that wasn't bad enough, the protection you get automatically with card purchases over £100 does not apply to purchases made with credit card cheques. This is because they do not have the necessary relationship between supplier and card issuer which a normal credit card transaction does. Could they possibly find any more ways to rip us off?

Perhaps the most irresponsible aspect is that they arrive unsolicited in the post. The obvious problem here is that if they go astray, they can easily be used by thieves. Unbelievably, in the accompanying letters sent by many providers with the credit cheques, consumers are encouraged to use them to 'pay for a large bill', 'give them as a birthday present' (yes, really) or 'give yourself some extra cash'. It reminds me of the anti-smoking campaign featuring 'Nick O'Teen', the cigarette who used to leer: 'Go on... just one more puff...'.

Fool's gold

Credit card cheques are the spawn of the devil. Stuart Glendinning of Moneysupermarket agrees: 'Consumers have never had it so good with 0% deals for both balance transfers and purchases being commonplace, yet it seems many are being drawn in to borrowing money in a very expensive way - not to use for emergencies, but for everyday spending, or to 'treat themselves'. My view is that if you receive unsolicited cheques from a credit card company you should avoid using them and destroy them immediately,' he says.

The good news is that a government review of the credit industry has recommended that credit card cheque books are only sent to customers who request them - a move which has been welcomed by the Consumers' Association. 'Many people think credit card cheques are a menace and could be used fraudulently,' says Labour MP James Plaskitt. 'Unsolicited issuing amounts to opportunist marketing of the worst kind,' he adds.

So, once more for the cheap seats: Don't use them. Rip them up. Tell your card issuer not to send them again. Ever.