Virgin Money takes a £7.8m hit after being over-optimistic about zero-interest credit card deals
Virgin Money uses 0% introductory offers, lasting several months before interest payments kick in
Virgin Money has taken a £7.8million hit after admitting it was over-optimistic about zero-interest credit card deals.
The lender uses 0 per cent introductory offers, lasting several months before interest payments kick in to tempt customers.
Accountants assumed most cardholders would stay after this initial discount ended, but instead many more than expected quit.
That meant Virgin missed out on money it had expected to earn from them in interest – cash it had already booked as profit.
It follows months of speculation about the health of Virgin’s £3.1billion credit card business.
Virgin unveiled profits of £127.2million for the first half of 2018, up 2.7 per cent on a year earlier.
It hiked its dividend by 21 per cent to 2.3p per share. Shares fell 0.7 per cent, or 2.6p, to 385.4p.