Wallets full of unused credit cards

Millions of Britons are carrying credit cards around with them that they never use.

But while the average Briton is carrying 2.1 credit cards with them every day, one person in four has one card in their wallet that they have not used in the last year, while one person in nine has two unused cards and one person in ten has three, figures from Morgan Stanley show.

The least likely card to be left languishing at the back of wallets is a cash-back card. Just one unused card in seventeen is a cash-back credit card.

By contrast, cards handed out by major banks and balance transfer cards with their interest-free period expired make up the majority of unused cards.

"There has been much speculation about the increasing use of plastic in the UK but our report shows that British cardholders are perhaps more savvy than they have been given credit for," said Patrick Muir, marketing director for the Morgan Stanley Credit Card

"Millions of cardholders are taking advantage of loyalty schemes for their everyday spending, with these cards least likely to be lying idle in wallets."

However, there is a danger to dormant cards. While it makes sense to have a back-up card for emergencies, these are the cards that present the greatest identity fraud risk.

This is because when people do not use cards, cut them up, or leave them in a draw the account remains open. Identity fraudsters who obtain personal information about the account holder can contact the credit card provider and get the account's address changed.

After this new/replacement cards - along with bills - are sent to a different address and the fraudster can access the account for months racking up thousands of pounds of debt. They can even get the pin-reissued to the new address.

And as the account is dormant the real cardholder is not used to receiving statements, meaning they do not even notice this happening.

ICICI Savings Account

ICICI UK Bank is the UK subsidiary of India's second-largest bank. It has been open for business in the UK since November 2003 and offers a full range of banking products.

The one that caught the attention of Bruce and I is the online HiSave savings account. It launched paying a whopping 5.4%, which was reduced to 5.15% in November 2005.

Sonjoy Chatterjee, managing director and chief executive officer of ICICI UK Bank told me the main reason why it is not compliant is because customers are not able to change their card Pin to a four-digit number of their own choosing. He explained that the bank's operating system was being upgraded to enable customers to do this and he hoped it would be ready in the first half of this year.

But there are several other aspects of the bank that I am still not entirely comfortable with. For instance, Mr Chatterjee told us that the average length of time it takes for a transfer to arrive from the saver's current account to their HiSave account is eight working days.

This is compared to three days with most online accounts, meaning that savers lose around a week of interest every time they do a transfer. We could find no mention of the time period in the terms and conditions for the account although Mr Chatterjee assured us that customers were aware of this.

He told us they had addressed several aspects of the bank's customer service that we raised with him several months ago. Readers complained their emails were going unanswered, phones in the customer service department were ringing out and it was impossible to get problems sorted out.

He said it was now standard for account holders to have a reply to emails within one day. He also said extra customer service staff had been employed, although he would not be drawn on how many. He also would not say how many British savers had opened a HiSave account or whether the bank planned to further the reduce the rate. It guarantees to stay 0.25% above the base rate until December 2007.

Importantly, ICICI is covered by the FSA compensation scheme which means that the bulk of your savings up to £32,000 are protected.

Susan Hannums, savings manager at AWD Chase de Vere told me that they were watching closely monitoring the bank's activities, but were not recommending it.

'We haven't used them yet and there's nothing particularly wrong with them but we're just sitting back and waiting for the dust to settle a bit,' she said.

'I understand their customer service is appalling and it was taking people weeks just to get their account set up. But they are covered by the FSA compensation scheme, which is the main thing.'

Finance Choices verdict: The bottom line is that your money is protected by the FSA and the rate is good. But we're reluctant to recommend an institution that does not meet minimum customer service standards and that routinely takes eight working days for funds to be transferred. We've heard so many mixed stories about ICICI that we urge caution. We agree with Susan Hannums. Stick with what you know until their UK record is better established.

Find our more about the ICICI Savings Account now.