Changes to way minimum payments are calculated...

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athorn
athorn Posts: 5 Forumite
in Credit cards
Hi,
Has anyone else experienced this? I've got an MBNA card and I've received notice today that as of April 1st the minimum monthly payment will be recalculated as 1% of balance plus interest. This means my minimum payment will go up by £125. I can't afford this, is there anything I can do??
Help and advice needed please!
Thanks
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  • BugsyBrowne
    BugsyBrowne Posts: 5,697 Forumite
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    athorn wrote: »
    Hi,
    Has anyone else experienced this? I've got an MBNA card and I've received notice today that as of April 1st the minimum monthly payment will be recalculated as 1% of balance plus interest. This means my minimum payment will go up by £125. I can't afford this, is there anything I can do??
    Help and advice needed please!
    Thanks

    Damn what ever is your current balance?
  • athorn
    athorn Posts: 5 Forumite
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    It is a lot, £13000. I consolidated other debts into one to make it easier
  • Tixy
    Tixy Posts: 31,455 Forumite
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    Not really anything you can do - and yes its going to all MBNA customers.

    Your only option if you cannot afford it, and cannot make cutbacks elsewhere so you can afford it, is to default on the agreement and accept you will get a default registered on your credit file. They may then consider freezing interest & charges on your account.

    No point trying to move to another CC as all new accounts now have these repayment terms.
    A smile enriches those who receive without making poorer those who give
    or "It costs nowt to be nice"
  • Graham29
    Graham29 Posts: 122 Forumite
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    I've just had the same letter from Virgin. OP I assume the CC isn't interest free, can you not transfer the balance to another interest free card?
  • Percy1983
    Percy1983 Posts: 5,244 Forumite
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    I mean this in the nicest possible way, but if you where only paying minimum payments on that amount it would take forever to pay it back, in some ways this might do you a favour and force you to pay it back quicker.

    You maybe better off posting in the DFW section as they be able to help more.
    Have my first business premises (+4th business) 01/11/2017
    Quit day job to run 3 businesses 08/02/2017
    Started third business 25/06/2016
    Son born 13/09/2015
    Started a second business 03/08/2013
    Officially the owner of my own business since 13/01/2012
  • athorn
    athorn Posts: 5 Forumite
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    Thanks for the comments. In time I will be able to pay more off as I will have a loan ending but in the meantime I haven't, so I have got plans in place to clear the card. I wondered if my only option is an interest free card? MBNA have offered to put me onto a payment plan but obviously this will affect my credit rating and feel quite angry at this as I haven't done anything wrong !!!
  • Tixy
    Tixy Posts: 31,455 Forumite
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    Transferring £13k of debt to a new interest free deal isn't going to be easy. Particuarly as it sounds like you are struggling to meet your commitments so presumably already have quite a lot of outstanding debt.
    A smile enriches those who receive without making poorer those who give
    or "It costs nowt to be nice"
  • whatyadoinsucka
    whatyadoinsucka Posts: 737 Forumite
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    yeah got my virgin letter today, its a shame i'm on 0% interest till Nov 2011, so it will have nil effect on me, and I'll have paid it off before a penny worth of interest is payable
  • chattychappy
    chattychappy Posts: 7,302 Forumite
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    Percy1983 wrote: »
    I mean this in the nicest possible way, but if you where only paying minimum payments on that amount it would take forever to pay it back, in some ways this might do you a favour and force you to pay it back quicker.

    You maybe better off posting in the DFW section as they be able to help more.

    Meant in the nicest possible way, I'm sure. But why should someone who was servicing their debt properly now find they are pushed into default?

    I can't see it as a "favour" - people are always free to pay more than the minimum. People's circumstances change - sometimes they pay more back, sometimes less. Few people plan or actually do run up a big debt and then pay back a slowly declining debt for 30 years. I financed a year long course on a credit card. During that time I paid very little back. Within weeks of completion I paid the whole lot back.

    Responsible borrowing is about budgeting, planning, assessing risk (ie of income changes, sudden expenses etc). Get it wrong and you default. But how can you plan if repayment terms change?

    Yep, they have the right to change T+Cs. But it seems wrong to me to change the terms of existing debt. This used to be the case with interest hikes - but it was stopped (via the opt out).

    If you are supposed to plan for possible minimum repayment changes, exactly how much should you allow for? What if your minimum repayments were raised to 10%? Or 50%? Only people who always pay their balance in full are "safe" from this kinds of change.

    The notice period is relatively short considering for some their minimum repayments will double or triple. For those that paid an upfront free for a low APR BT, the effect is to retrospectively reduce the value of the deal they got.

    I think this change is open to legal challenge, but as far as I know nobody has tried.
  • Percy1983
    Percy1983 Posts: 5,244 Forumite
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    By all means you are correct, I am looking at the wider picture and think its a good thing overall. Unfortuantely it will cause problems for many but overall it will promote more responsible lending.

    In short a few of the innocent suffr due to many getting it wrong, its just unlucky.

    Back on the issue you say you have a loan which will be up, how much are the monthly payments and when is the final payment. It may be a case of plugging the gap by running up an overdraft or another credit card in the short term then using what was the loan money to catch up.
    Have my first business premises (+4th business) 01/11/2017
    Quit day job to run 3 businesses 08/02/2017
    Started third business 25/06/2016
    Son born 13/09/2015
    Started a second business 03/08/2013
    Officially the owner of my own business since 13/01/2012
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