MBNA Warning

PDE49

I just wanted to forewarn any MBNA credit card customers of what is happening. If you have a credit card that is close to it's limit, and you have an arrangement in place to pay the minimum amount by direct debit each month, you need to consider also making a manual payment to them.

I was in that position, and found out to my cost that MBNA have significantly increased their interest rates, but they have not increased the amount of the minimum payment to reflect the increase in interest. As a result, the interest they charged me was more than the amount I paid them as a minimum payment, and it took me over my limit, and I incurred a £12 charge for being over my limit.

I spoke to MBNA about it, and I put it to them that if I had deliberately gone over my limit by spending on the card, I would have accepted the charge, but I had no control over them increasing their interest rate and they set the amount of the minimum payment, so I had no control over that either, so I felt that they had a responsibility to increase the minimum payment to reflect the increase in interest. I wondered just how many £12s they had made by doing this to every customer.

They weren't interested in my appeal and just referred me to my contract, and said that they had mentioned the new interest rate in some changes to the terms and condions they had sent to me, (which I doubt a lot of people will read), and as far as they were concerned, it was my responsibility to keep within the limit whether they increase the interest or leave the minimum payment as it is and it was up to me to pay the charge and find the funds to get back within my limit.

Surely the FSA should be getting on to MBNA and asking them to make this crystal clear to customers so that people don't get in to debt by being charged unnecessarily. It seems a very devious way of putting people over their limit.

vbrindle

That's just silly isn't it. What are they thinking? Or are they being crafty knowing they'll get loads in fees and charges.

The minimum payment should always be more than the interest they charge. Obviously it's designed so you never pay it back but in their case it's going the other way.

Shocking.

YorkshireBoy

MBNA's minimum payment calculation is the greater of 'interest + charges + PPI + £5' or £25. As such, you'll always clear the previous month's interest.

However, if you're nudging your credit limit (which is just that by the way...a limit, not a target to achieve!) - and continue to spend on the card - the interest accruing the following month might tip you over once it's applied on the statement date.

Operating within a whisker of your credit limit is a very dangerous place to be (in more ways than one), as I'm sure you know now. Why not BT some debt away elsewhere, to create some breathing space?