Virgin Money suspends 30,000 customers credit cards with no warning

Virgin Money has suspended thousands of customers’ credit cards without warning, at a time when many households are on a financial cliff edge.

It is understood that as many as 32,000 customers were told by email on Tuesday that their accounts were blocked with immediate effect, and that they would not be able to make further purchases.

The move, which the Newcastle-based bank said was part of routine “affordability checks carried out by a responsible lender”, took many of its customers by complete surprise.

Virgin Money’s timing could not have been worse given that the the six-week Covid-19 lockdown is hitting many families’ finances hard.

It also appears to go against the spirit of the Financial Conduct Authority’s instruction to card providers at the start of the crisis that they should accommodate those in financial difficulties.

Cardholders who claimed to have good payment histories described their shock at the move, which is likely to examined by the regulator.

One cardholder said: “I’ve had an email saying they are blocking my card from future spending. I have more than half of my balance available, have never been fined, have made substantial repayments each month since I got the card last year. I should have 10 months left on my 0% purchases.”

On the online review website Trustpilot other customers talked of their “disgust” at the bank’s “shameful” move.

Borrowers hit by the financial impact of the lockdown can apply to their lender for a three-month credit card payment holiday. In March the FCA said it was suspending its persistent debt rules until October at the earliest, meaning accounts could not be removed without warning.

A spokesman for Virgin Money, which on Wednesday reported a £7m loss, said the bank had not suspended the cards of customers who had contacted it to say they were in financial difficulty.

He conceded, however, that customers in financial difficulties may have been caught up in this unwittingly.

Citizens Advice revealed this week that more than 13 million people have already been unable to pay, or expect to be unable to pay, at least one bill because of the coronavirus outbreak.

“As a responsible lender we do need to review accounts regularly, in line with other credit card providers,” said a Virgin Money spokesman.

“Customers can request for accounts to be reopened, including any customer impacted by Covid-19. These will be reviewed on a case-by-case basis and fast-tracked if required.

“Our approach is clear: that we will support any customers impacted by Covid-19 to ensure they have funds available for essential spending, and we would encourage anyone with concerns to get in touch so we can help them as quickly as possible.”