Virgin Credit Card - Are They Bad at Maths?!

Money_Man_Steve

I got a Virgin credit card recently and I seem to be getting an unexpected benefit - my minimum payments are ridiculously small!

I transferred just over £8k on to the card at 0% and set up a direct debit for the minimum payment. My first month's minimum payment was only £55. I thought this may just be a quirk in the first month, but this month they are only requesting £5!

Minimum repayments are meant to be 2.25% of the balance according to the T&C's. which works out at £180 on my £8k. Still, it's great for stoozing and I'm certainly not complaining!

Has anyone else had similar luck?


Money Man Steve

ctm_2

Virgin is MBNA isn't it?

They have the option of £5 minimum payments, so no, they aren't wrong.

From their site. The minimum payment is:

The lesser of:
* 2.25% of your balance (min. £5) or
* charges for Payment Protection Cover plus interest and fees, plus £5 or
* your balance, if it's under £5.

So, the 2nd in the list applys to you.

ctm_2

Ian_Griffiths wrote:

As I understood on reading their documentation is should be percent. I can't see them being too bothered as when the time comes from the 0% to run out I still owe them loads, which is good for them and bad for me when I can't move it.

See above. It's the lowest of the amounts that they charge as the min payment.

They will charge 2.25%, the entire balance if below £5, or £5 plus any interest, PPI etc. As you are on a 0% deal, there is no interest, ppi etc, so £5 plus £0 is the lowest of the three options, and is therefore what you will be charged for the minimum payment.

Money_Man_Steve

ctm wrote:

Virgin is MBNA isn't it?

They have the option of £5 minimum payments, so no, they aren't wrong.

From their site. The minimum payment is:

The lesser of:
* 2.25% of your balance (min. £5) or
* charges for Payment Protection Cover plus interest and fees, plus £5 or
* your balance, if it's under £5.

So, the 2nd in the list applys to you.

Yeah, I re-read the T&C's and I see what you mean. It seems really odd though - I can understand them wanting to take as little as possible in a monthly payment if they were charging interest. But during the interest-free period you'd expect them to want more of their money back sooner, from a 'business sense' point of view.

Most credit card companies have a minimum payment that is the greater of... etc.

Money Man Steve

YorkshireBoy

Money_Man_Steve wrote:

It seems really odd though...

A cynical view would be that once the 0% introductory period has finished, you have a bigger balance on which they can charge you 15.9%.

Remember, not all credit card users are as financially savvy as stoozers and seasoned rate-tarts.