MSE News: Co-op admits to unfair rate-jacking rule

Former_MSE_Guy · 21 February 2011 at 4:39PM

This is the discussion thread for the following MSE News Story:

"The provider says it was wrong to threaten to punish credit card customers who legitimately reject an interest rate rise ..."

Read the full story:
Co-op admits to unfair rate-jacking rule

plumber2009 · 21 February 2011 at 5:09PM

I thought these people had an ethical banking policy?

Obviously not.

pompeyfaith · 21 February 2011 at 5:11PM

Not with me they aint, they stonewalled my PPI complaint for over 2 years

izools · 21 February 2011 at 5:17PM

We won again guys, well done to those who participated in the prior thread

:beer:

Premier_2 · 21 February 2011 at 5:32PM

plumber2009 wrote: »

I thought these people had an ethical banking policy?

Obviously not.

Nothing ethical about this bunch, I'm afraid.

I had a Gold credit card guaranteed free for life (it was the only term in the agreed terms they were not allowed to alter).

So they cancelled my card instead :mad:
(it wasn't in any kind of default)

KimYeovil · 21 February 2011 at 5:55PM

Yet another example of short-thinking idiotic consumer advocacy groups shooting their clients in the foot.

Co-operative Bank will be rubbing its hands with glee. It had opted for an ethical stand - encourage customers to treat credit card debt as credit card debt and to be ready to repay it within a month or three (but having the option to extend it a little now and then at a price). Now instead of forcing stupid customers to pay a pittance in interest over six months those fools will now be paying ten or twenty times more interest over a much longer period of time. Those same customers who do continue to repay only a minimum sum are not going to do anything sensible with the extra free cash they have. Of course, sensible customers will not be affected by this - they will knuckle down and quickly repay any debts when the interest rate changes.

I really can not understand the motivation of the advocates of this. Do you really despise the foolish and poor and want to hurt them as much as your actions seem to dictate? How the blazes does this help them?

speedbird1973 · 21 February 2011 at 6:02PM

izools wrote: »

We won again guys, well done to those who participated in the prior thread :beer:

To be fair there's no final decision yet! Hopeful it is looking though!

CpdButWhy · 21 February 2011 at 6:40PM

KimYeovil wrote: »

Yet another example of short-thinking idiotic consumer advocacy groups shooting their clients in the foot.

Co-operative Bank will be rubbing its hands with glee. It had opted for an ethical stand - encourage customers to treat credit card debt as credit card debt and to be ready to repay it within a month or three (but having the option to extend it a little now and then at a price). Now instead of forcing stupid customers to pay a pittance in interest over six months those fools will now be paying ten or twenty times more interest over a much longer period of time. Those same customers who do continue to repay only a minimum sum are not going to do anything sensible with the extra free cash they have. Of course, sensible customers will not be affected by this - they will knuckle down and quickly repay any debts when the interest rate changes.

I really can not understand the motivation of the advocates of this. Do you really despise the foolish and poor and want to hurt them as much as your actions seem to dictate? How the blazes does this help them?

While in general, I agree with the stupidity of racking up debts you are not able to repay in a short timeframe, there is one aspect of the situation you seem to be unwilling to consider.

This is about a situation where the customers are unable to pay the interests, BECAUSE the interest rate was hiked by Co-op. If the interest rate had not been hiked, there may not have been a problem. Therefore defining such strict deadline for repayment after the customer chose to reject the hike because he was able to keep up with the existing rates but not the new ones, takes away existing options from and creates problems for the customer, sometimes in situations where there was no problem otherwise.

If Co-op had been looking at every customer's best interest, or at least acting in fairness, then they would not have allowed them to get into such a situation by not letting them get that much credit. In that case the necessary repayments would be smaller and much easier doable by more customers.

This approach of taking away someone's choices can not help any customers, despite how you try to paint a picture about it, as it never improves anyone's situation. Forcing someone to repay in time if he was able to tries to force customers to follow the rules which they are supposed to, anyway, therefore it cannot be classified as positive for the customer, anyway.

If someone is able to repay faster, it is his best interest to do so anyway. But not everyone is able to repay faster, even if Co-op is trying to force them.

Paulgonnabedebtfree · 22 February 2011 at 12:29AM

KimYeovil wrote: »

Yet another example of short-thinking idiotic consumer advocacy groups shooting their clients in the foot.

Co-operative Bank will be rubbing its hands with glee. It had opted for an ethical stand - encourage customers to treat credit card debt as credit card debt and to be ready to repay it within a month or three (but having the option to extend it a little now and then at a price). Now instead of forcing stupid customers to pay a pittance in interest over six months those fools will now be paying ten or twenty times more interest over a much longer period of time. Those same customers who do continue to repay only a minimum sum are not going to do anything sensible with the extra free cash they have. Of course, sensible customers will not be affected by this - they will knuckle down and quickly repay any debts when the interest rate changes.

I really can not understand the motivation of the advocates of this. Do you really despise the foolish and poor and want to hurt them as much as your actions seem to dictate? How the blazes does this help them?

For "stupid" and "foolish" it would be just as easy to refer to "those who are experiencing financial problems due to a relationship breakup" or "those who became to ill to work for a few months and are struggling".
Perhaps one day you will encounter problems in your life over which you have no control. I sincerely hope not but if you do, hopefully it will make you less judgmental of others.

The Co-op bank - credit card section - once let me have a limit of £10k+. Theoretically, I might have maxed it out. It's certainly too much for most (including me) to repay in 6 months. However, that limit was drastically reduced a couple of years ago. No problem. I owe them very little anyway. It's other companies who I owe a lot to. It's my debts elsewhere that would make it hard to repay my debts to Co-op within 6 months.
Of course everyone would like to be able to repay all their debts within 6 months. However, even lenders have traditionally taken the view that unsecured borrowing could go as high as one year's salary - and often would allow it to go much higher. Certainly a level that most would struggle to repay within 6 months.
Co-op will make more out of those who only repay the minimum but repaying the minimum temporarily is far better than being pushed into defaulting.

Paulgonnabedebtfree · 22 February 2011 at 12:31AM

izools wrote: »

We won again guys, well done to those who participated in the prior thread :beer:

Not necessarily but I'm glad I drew attention to this in the first place.

proeleche · 22 February 2011 at 1:12AM

KimYeovil wrote: »

Yet another example of short-thinking idiotic consumer advocacy groups shooting their clients in the foot.

Co-operative Bank will be rubbing its hands with glee. It had opted for an ethical stand - encourage customers to treat credit card debt as credit card debt and to be ready to repay it within a month or three (but having the option to extend it a little now and then at a price). Now instead of forcing stupid customers to pay a pittance in interest over six months those fools will now be paying ten or twenty times more interest over a much longer period of time. Those same customers who do continue to repay only a minimum sum are not going to do anything sensible with the extra free cash they have. Of course, sensible customers will not be affected by this - they will knuckle down and quickly repay any debts when the interest rate changes.

I really can not understand the motivation of the advocates of this. Do you really despise the foolish and poor and want to hurt them as much as your actions seem to dictate? How the blazes does this help them?

First, nobody in the previous thread suggested for one minute that people should accumulate levels of debt that they will be unable to cope with. The whole point of these new rules was to allow people to pay the debt off at a pace that suited them, with the interest rate that they initially agreed to.

Secondly, whilst I agree that it is foolish to continue to pay only the interest on debts and make no dent in the capital sum, people can only afford to pay what they can afford to pay - this is a fact of life. Also, in a lot of respects, credit card companies are as guilty as some consumers with regard to the levels of debt in this country.

All in all, I think the co-op re-considering this rule is a move in the right direction. It should be clear to anyone with any common sense that the particular customer's overall situation -level of debt and disposable income - needs to be assessed before a 'reasonable' time-frame for re-payment can be established.

MSE News: Co-op admits to unfair rate-jacking rule

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