0pc credit card blunder costs Virgin £7.8m

VIRGIN Money has taken a £7.8m hit after admitting it was over-optimistic about zerointerest credit card deals.

The lender uses 0pc 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 £3.1bn credit card business.

Virgin unveiled profits of £127.2m for the first half of 2018, up 2.7pc on a year earlier. It hiked its dividend by 21pc to 2.3p per share. Shares fell 0.7pc, or 2.6p, to 385.4p.