MBNA rate increase

zxqyu

Thanks for all the responses.

In summary, here are my thoughts.
All lenders do have an obligation to treat their customers fairly. There is plenty of legislation and regulation out there to try and ensure this. I think there must be a limit to how much lenders can increase their rates without breaching this obligation. Increasing the rates on an existing balance by 130% (APR from 15% to 34.9%) with 30 days notice on a 3-year old account where there has never been any late payments to me seems unfair. Just because it says they can do it in their terms and conditions doesn't mean that it's fair - and unfair contract terms are unlikley to be enforceable.

I don't think lenders are doing themselves any favours with behaviour like this. They're drastically hiking up the interest on borrowers because they now percieve them to be a higher credit risk (which also means they're unlikely to be able to move their business elsewhere).

I can't imagine that many people with credit cards would have budgeted on their APR increasing by 130% in a short space of time. Whilst my financial situation is by no means critical, I believe this sort of thing could cost lenders a lot of money as they force people to consider drastic solutions such as IVAs or even bankruptcy.

I'm lucky – I now have the facility to pay off the majority of my cards. Where I've screwed up here - is not keeping proper track of my finances (I had other things to worry about) and realising that Virgin were screwing me. This may have cost me a £1000 but at least I won't have to deal with them anymore! :j

ticketcollector

I had this happen to me as well on Sky Card.
I once had a nice rate of 12.91% (as if the 0.01% made any difference) and one month they increased it to 39.9%.
Even the advisor on their customer services department had never ever seen a rate that high.

I quickly moved it elsewhere and have never ever touched them.

_Andy_

I never understand why people feel hard done by when the interest rate on a variable rate credit agreement varies.

Gorgeous_George

I have little sympathy for someone with such a flippant attitude to debt but...

... Virgin should have done something when the mail was being returned. I appreciate that no additional spending was being applied to the card and that payments were being made on time but, surely, they should have done something to contact the OP.

GG

clio

well andy we are only human it's the shock and the thought of being singled out for extra special unfair treatment it's hard to take.

btw are there any credit cards that are not variable ?? - doubt it - so it can
happen to anyone and maybes 90 odd % of all credit card users sometime...

zxqyu

_Andy_ wrote: »

I never understand why people feel hard done by when the interest rate on a variable rate credit agreement varies.

As a consumer, you're protected from unfair contract terms. This helps compensate consumers for not having the opportunity to negotiate with large companies on the terms and conditions.
An obvious example of why this protection is here... You move into a new house and need to sign an agreement with a new electricity supplier. You have a choice of either signing the agreement or having no power. That wouldn't be very fair if the electricity supplier could put anything they want in their agreement.
If Virgin increased their rate to 1499% APR (as their terms and conditions allow) would you think that's ok?
The question is, what is fair? In my mind, increasing someone's APR from 15% to 34.9% with 30 days notice (quite possibly because an analyst has calculated that Virgin can increase their profits by drastically hiking their rates for customers who will have difficulty taking their business elsewhere) is unfair. I appreciate this may not be unfair in everyones' minds - but it is in mine.
And many others it would appear... Found this thread...
http://www.consumeractiongroup.co.uk/forum/mbna/114133-great-mbna-virgin-interest-6.html

YorkshireBoy

zxqyu wrote: »

The question is, what is fair? In my mind...

With respect, it doesn't matter what you think. Only a judge can decide what's fair (as in the UTCCR...or whatever it's called), as per the current bank charges issue.

That said, I do think 1499% APR (although not unheard of with doorstep/provident loans etc) would be a tad steep on a mainstream credit card.

zxqyu

YorkshireBoy wrote: »

With respect, it doesn't matter what you think. Only a judge can decide what's fair (as in the UTCCR...or whatever it's called), as per the current bank charges issue.

That said, I do think 1499% APR (although not unheard of with doorstep/provident loans etc) would be a tad steep on a mainstream credit card.

I'm glad you agree on the 1499% APR
It is up to a judge decide if someone puts it to them. That's only going to happen if this issue is highlighted (unfair increase in APRs - not me being crap at updating my address)
Back to my original question, "Have I been treated fairly?" Was looking for some reference to previous cases to see if I have a case. Guess not in my circumstances (as I should have notified them of my change of address and they did reduce my rate back down to a “more” reasonable level when challenged).
Although, from reading other peoples' experiences, I do think that Virgin/MBNA do have a case to answer to with other people. I'm sure there are other methods they could use to "help" people manage their debts rather than applying interest to penilise people who no longer fit their desired customer profile.

YorkshireBoy

zxqyu wrote: »

Was looking for some reference to previous cases to see if I have a case.

Issues such as yours are often raised on this board. It's been said before that if ever a case went to the FOS, MBNA would simply say "our credit scoring models (which shall remain confidential) have identified this customer as having an unacceptable level of risk, and we have re-priced for that risk". Case closed as far as the FOS is concerned!

Fundamentally, you (and others) need to understand that credit is a privilege, not a right. Credit should also be used wisely, and I think racking up debt month after month with no thought to 'what if' is very dangerous. Just like the credit card interest rates are variable, a current account overdraft is 'repayable on demand'. If you only ever spend what you can afford to repay at the end of the month (and use credit as an emergency, but with a plan in place to repay) you won't go far wrong.

I do think that Virgin/MBNA do have a case to answer to with other people.

MBNA are a strange company. They're either your best friend (with low rate BT's) or your worst enemy (with 34.9% APR), but one thing's for sure...if/when you clear the MBNA debt, and call to close your account, you WILL be offered something to stay. Bear that in mind if you're thinking of burning your bridges.

CLAPTON

zxqyu wrote: »

I'm glad you agree on the 1499% APR
It is up to a judge decide if someone puts it to them. That's only going to happen if this issue is highlighted (unfair increase in APRs - not me being crap at updating my address)
Back to my original question, "Have I been treated fairly?" Was looking for some reference to previous cases to see if I have a case. Guess not in my circumstances (as I should have notified them of my change of address and they did reduce my rate back down to a “more” reasonable level when challenged).
Although, from reading other peoples' experiences, I do think that Virgin/MBNA do have a case to answer to with other people. I'm sure there are other methods they could use to "help" people manage their debts rather than applying interest to penilise people who no longer fit their desired customer profile.

have you been treated fairly?

morally maybe yes

but, well in legal terms I would say you have absolutely no chance in law

but the only way you will know is going to court.

no point in debating here