Credit Card - can anyone explain my rate ?

Somerset

I'm a bit confused about something. My c/c spending is about 1.5K p.m. but occasionally ( about once a year ) it'll go way over. My Goldfish card, which is my main card, has a 2.5K limit, so on the 'high' month, I'll also use the Mbna card which has a 5K limit. This is the 'high' month so both cards have balances. Both cards will be paid off in full before 'payment due date'.

Ok, so Mbna card statement arrives today with 2.2K on it - it hasn't been used for maybe 12 months. I'm about to file it when I see something, have a thought but then can't work out if the thought will work or not.

Payment due date ; 29/11/08, Available to spend 2.8K, Minimum Payment £25, New balance this statement 2.2K.

Next page 'Your credit card statement' Promotional monthly rates available to use - .02425 bal tfr's, chq transactions, money tfrs until your Nov 2009 stmt

Promotional monthly rates you're currently using :
HLLFB32CD 0.0000% for card purchases until your June 2009 statement date.
All rates will revert to the standard rate of interest after the promotional end date *

My initial thought was - if I've got a promotional rate of 0% I could let the balance sit till May 2009 and then pay it, but ..........
The statement proper seems normal ie min payment £25, payment due date 29/11/08 and 10/11/08 Est interest-Next Statement 22.05.

Maybe I should just pay it off to avoid confusion - I just don't get why it says I've got a promotional rate of 0% on cards purchases till 06/09 when the statement doesn't reflect that statement.

Can anyone explain please ?

Somerset

Ok, I've had it explained by Mbna over the phone - not sure whether to believe it or not ( I'm a cynic !!! )

What they are saying is, as long as I make the minimum £25 payment before the 'due' date, and continue like this - then when the June 2009 statement arrives ( and promotional offer expires ) as long as I pay the balance off in full, no interest will be charged. The est interest £22.05 in post #1 will only be applied if I don't make the minimum payment by the due date ie for info only. Plus apparently the above scenario similarly applies to any future purchases up to Feb 2009.

Thought an explanation might help someone else ??

Maybe some of you 'old-hands' at the credit-card game might think it obvious what they were saying - I normally just get the bill and pay it off in full so never look at the promotions or interest rates.

Seems a bit of a no-brainer ! I couldn't see how it wouldn't be costing Mbna money to be doing this, but I assume the hope is that you can't pay it off when the promotion ends !

cavim

Some things you need to watch with MBNA, who I think are a bit naughty in their marketing/rate charging:-

The minimum payment of £25 is very low for a £2200 debt (a little over 1%). Eg if you pay £25 each month till June next year then you've paid off very little of the debt.

MBNA are then hoping you'll not be able to pay off the full amount before the due date (remember to allow several working days for the full outstanding payment to go through too!), so that they can then wack on the full interest rate charge. On my MBNA card that's about 30% per annum, which I think is pretty disgusting with bank rates so low currently and it's no wonder people end up in debt! (My view is that it's the financial institutions that have put so many people into debt by their immoral marketing tactics and reliance on people not reading the small print! It seems that, every time they're stopped from doing something immoral/unethical as far as customers are concerned, they find a way around it,)

Also be careful re balance transfer rates they offer you before the purchase deal expires & make sure that, if you're thinking of taking advantage of the balance transfer deal too, you pay off the full purchases/transfer deals' balances in the order they need to be paid (see the small print re which MBNA apply monies to first). If not, you can end up paying the full interest rate without realising that's what's going to happen.

Another thing to watch with balance transfers is the fee. At the end of the day, a 3% fee is a lot of money, it's often taken up front with the first minimum payment, & if you later transfer the balance somewhere else & pay their fee up front too the true annual interest rate on your debt starts to stack up!

Hope this helps & doesn't confuse too much. In summary, be very careful & read all the small print, including the terms & conditions changes that seem to arrive in the post every month or so!!

YorkshireBoy

cavim wrote: »

On my MBNA card that's about 30% per annum, which I think is pretty disgusting with bank rates so low currently and it's no wonder people end up in debt!

Interesting view!

My view is that people end up in debt because they spent on credit without a robust plan in place for repaying that debt (ie from the wages they were going to draw at the end of the month)...not because the lender has upped the rate to 30% APR.

Another thing to watch with balance transfers is the fee. At the end of the day, a 3% fee is a lot of money

It represents around 2 months interest for someone on a 'typical' 17.9% APR product, and less than 6 weeks interest for someone such as yourself on 30% APR. When coupled with a 0% BT deal, that's a godsend isn't it?

it's often taken up front with the first minimum payment

MBNA now (as of September this year) add it to the balance. As such, I don't think there are now any providers who operate this way? Customers are allowed to pay it in the first month though...but how many will?

& if you later transfer the balance somewhere else & pay their fee up front too the true annual interest rate on your debt starts to stack up!

But it's still cheaper than paying 30% isn't it?

cavim

Why is it that some people on these forums have to pick apart everything other people say, when the point is for us all to help each other & be able to share our own experiences and express our own views?

The original enquiry was from someone who usually clears their card bills. That's still the best way to go but, if they're considering taking advantage of 0% rates, they might need help from those of us who've been caught out, or nearly caught out, in pointing out possible pitfalls.

I'm not paying the 30% that MBNA have slapped on my credit card as a standard rate, but I know plenty of people who've been caught in the "small print" or changed conditions trap. Not everyone has a financial mind or the ability or stamina to read & understand all the small print & that's what the big companies rely on.

YorkshireBoy

cavim wrote: »

I'm not paying the 30% that MBNA have slapped on my credit card as a standard rate...

That's good. Why not ask them to lower it then?

When they raised mine (from 15.9% to 24.9%, and between 0% deals) I rang customer loyalty* and asked them to lower it. They gave me 10.9%(!), where it stayed for a good while until they raised it to 18.9% recently (credit crunch)...and then promptly put me a 0% offer on there!


* 0800 783 1116