MBNA - Unfair Charges = HUGE Interest Rate Increase ?

Sleepy_2 · 17 June 2006 at 3:35PM

I've had my Ryanair CC (MBNA), with a limit of £5100 and an APR of 15.9% for the last 3 years. During this time I've paid 15.9% on the balance, and I've taken the low Interest Rate offers when they have been offered. Probably quite a good

I have never made a late payment, or gone over my limit before. I've probably been seen as quite a good customer to MBNA paying hundreds in interest of the years - life before MoneysavingExpert !!

The Card was currently on a 1.9% APR for 9 months, due to finish on 1st July and to revert back to the 15.9% rate.

24/04 - Charged £25 Overlimit Fee for going £5.79 - which was my fault. I spoke to MBNA to kindly ask if they could take into account previous good management of the Card and reduce the payment. The answer was "No". I immediately paid the fee to take my account back under the limit.

25/05 - Charged £25 Overlimit Fee. Depite saying on the previous Months statement that the Interest Rate would be approx £12, they then charged the full 15.9% rate at £72.

When I queried this with MBNA, they told me that I had broken the T&C's and the rate automatically reverted to 15.9%. I advised that I didnt know this, even the previous statment with the 1st Overlimit Fee didnt mention this - (apparently the Overlimit Fee is applied automatically, next months interest rate is advised automatically, the statement is sent automatically, but the Interest Rate change is made manually - after the statement is sent) but the answer again was No.

Annoyed, I then asked if the Charges could again be removed as I believed that the charges were of a punishment, not a true reflection of the costs.

The answer was No.

07/06/06 - I sent a letter to MBNA using the Templates to request a refund of the £50 using one of the online Unfair Banking Charges Templates, asking for the £50 to be reimbursed in the next 7 days.

13/06/06 - Received a letter from the MBNA advising that they would review this and advise in the next 28 days.

Today - received a letter from the MBNA advising a change to my CC T&C's - the monthly Interest Rate is now to be 2.0751% (27.9% ?) effective 1st July.

I'm in the unfortunate position of not being able to transfer the balance as applications to an alternative card have been unsuccesful, so I'm guessing that there is very little I can do - I feel like the increase in July 06 is MBNA's way to reclaim the £50 which I may / may not get back.

It's really depressing to see the APR change...
May 06 - 1.9%
June 06 - 15.9%
July 06 - 27.9%
Aug 06 - :eek:

Thanks for listening.

Robert_Sterling · 17 June 2006 at 4:52PM

Thank you very much for your cautionary tale.

MBNA have had a lot of interest from you.
You have been a good customer generating profit for them.
You have broken the terms & conditions.
The MBNA have not broken the terms and conditions.
They may have charged too much and you may get some or even all of it back. The price you will pay is the increased increase rate.
I hope that you are able to transfer the balance, or some of it, to a low rate,for life of balance card. Good Luck.

kuohu · 17 June 2006 at 6:11PM

Good advice that comes up time and time again (usually from Grumbler

) is to setup a direct debit paying the minimum payment each month, and then pay the rest of what you want to pay off manually (either using online banking payment, a standing order, or whatever method suits you best). The DD should ensure that the correct payment is made on time and that you don't get stung if you happen to slip up one month.

Sorry to hear that you got the first £25 charge, and was unlucky with getting them to refund or partially refund when you spoke to them on the phone. If it was me I'm sure I'd have expected a bit of leniency too, but maybe the banks are toughening up.

As for the second £25, I'd have been really angry about this if it was me. Surely if they change the APR then they have to tell you, don't they? Especially if it says something different on your statement. And, if I understand correctly, you have only today been informed (by post) of the new APR. Seems very unfair to me.

I think I would have carried on with one more letter stating my case at feeling aggreived (especially with the second £25 and the APR hike) to customer services, without going down the 'reclaim fees action' route. But now that you have started the ball rolling, I wish you good luck.

...
Edit to add: I wonder if there is a wider debate here... will we start to see banks being more harsh if the issue of 'unlawful fees' or 'reclaiming charges' is mentioned to them at the outset? Could the banks think 'oh well he's going down the route of reclaiming anyway, lets sting him for all we can'.

looby75 · 17 June 2006 at 6:40PM

kuohu wrote:

...
Edit to add: I wonder if there is a wider debate here... will we start to see banks being more harsh if the issue of 'unlawful fees' or 'reclaiming charges' is mentioned to them at the outset? Could the banks think 'oh well he's going down the route of reclaiming anyway, lets sting him for all we can'.

The banks could very well end up shooting themselves in their own feet if they do that though.

Many people can just about manage to make their minimum payments each month as it is, if the interest rate shot up, as the OP's has, many many more people who have no option other than to start DMP or even bankruptcy. The banks would be the ones to lose out then surely?

Sleepy_2 · 19 June 2006 at 11:44AM

Thanks for all your comments - I can see why MBNA have done this, after all, they are there to make money.

I'm just miffed that it was for only £5.79 due to a transaction that occurred 4 days before appearing online (I forgot about it) - the minimum payments have always been met and I asked / pleaded with Customer Service so nicely to come to some arrangement when the fee was first levied - but unsuccesful.

Someone once said

"A bank will give you an umbrella in case it rains, as soon as it starts to rain they want it back immediately".

I think that there will be some interesting times ahead...

blowstar · 19 June 2006 at 12:58PM

Twice recently, I've had atypical large payments to make to credit card companies - i.e. £7000 or £8000 instead of my usual £1000/month balance. And on both occasions the cheques have been "lost in the post", the card company claims I've missed my monthly payment date and charges about £200 interest.

The incidence of these losses appears to be significantly higher than the Royal Mail standard for lost or misplaced mail.

Does anyone else think that credit card companies occasionally destroy larger cheques in order to claim additional interest?

It would be interesting to know how many MSE readers feel they've been extraordinarily unlucky when sending these sorts of payment.

kuohu · 19 June 2006 at 7:34PM

I was just reading your post Blowstar and thought hmm, how do you arrive at your stats. So I did a bit of googling...

BBC News says that 14 million items are lost in the post per year, out of 21 billion total items. So that's roughly one in 1400. Therefore, in all probability, you'll be posting off your cheques for 114 years between incidents of being lost in the post.

On this basis, then, yes it looks like you might have a valid conspiracy theory going on. But how can it be proved...?

Mikeyorks · 19 June 2006 at 7:54PM

blowstar wrote:

Does anyone else think that credit card companies occasionally destroy larger cheques in order to claim additional interest?

Sorry ....no, it's rubbish. MBNA don't process their own cheques, they are outsourced.

And no, I don't think they have an arrangement with the outsourcer either;)

It's a choice sort of thing. But. personally, when I have a CC bill of that magnitude - I pay it via BACS. Costs me less ... and it's trackable if they suggest it was late.

dazed · 21 June 2006 at 2:48PM

Speak to the customer loyalty department. They are the department that are able to revert rates back to another rate if promo turn off occurs. It maybe a 7.9 for 6 month deal but its better than paying 15.9. They are also able to see if they can stop any reprices happening. When you account is jumping from a standard rate of x to x then it is a reprice. The loyalty guys will be able to assist. If you dont ask you dont get. opening times monday to friday 8am - 7pm. saturday 9 - 1.

Number is 0800 7831116.

Hope this helps.

newleaf · 21 June 2006 at 3:41PM

Mikeyorks wrote:

It's a choice sort of thing. But. personally, when I have a CC bill of that magnitude - I pay it via BACS. Costs me less ... and it's trackable if they suggest it was late.

I recently tried to pay a loan off by BACS and was informed by the teller in my local (Halifax) branch it would incur a charge of £25 :eek: and would take about half an hour to complete. I changed my mind and sent a cheque by recorded delivery instead, total cost £1.

YorkshireBoy · 21 June 2006 at 4:17PM

newleaf wrote:

I recently tried to pay a loan off by BACS and was informed by the teller in my local (Halifax) branch it would incur a charge of £25.

Halifax charge £25 for CHAPS payments - BACS payments are free.

MBNA - Unfair Charges = HUGE Interest Rate Increase ?

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