Can MBNA increase the Interest rate to ridiculous 34%?

madhusudhan

I have got quite a bit of balance outstanding on MBNA cards (Virgin, A&L and Abbey - about 30k!).

I was talking to the representative yesterday and I was shocked to hear that the 0% balance rate has gone to 34%!!!

It seems once the balance transfer was done, they moved to 16%, then to 26% and then to 34%.

Due to financial situation I am at the moment, I am struggling to pay the actual amount - on top of this the interest rate hike is really eating my payments.

I asked them if I can get any reduced rate they said no. They said "I can complain, but I can't do anything as FSA knows what they are doing"

I am stupid to think that the rate was going to be at around 12%. But this 34% rate is really really terrible. They said I have been notified by post!

Is there any thing I can do to reduce the rate such as complain? or take to some bureau? etc.

Any advice is HIGHLY appreciated.

Thanks
M

cifpower

They can increase the APR to whatever they like - its what a variable APR means. You could ask them to reduce it and if they don't lodge a formal complaint saying you have an excellent credit record (if this is the case) and have never missed a payment. If that fails, your only option is to accept the increased APR or to transfer the debt to a 0% card.

chr1sjordan

Can't you balance transfer to another 0% rate?

nomoneytoday

All these people getting their charges and fees back is causing this. I'm sure the other institutions will follow suit...

dylanuk

There's a few news headlines going around about this - basically the government aren't happy with the cc companies and they've been having meetings to try and get the cc companies to act better (http://www.credit-card-comparison-online.co.uk/news/credit-card-news/5-December-2008.html).

There have also been cases of people getting their interest rates put back down again because the cc companies can't provide a reasonable explanation of why they put them up so much (http://www.credit-card-comparison-online.co.uk/news/credit-card-customers-fight-interest-charges.html)

Hope this helps

madhusudhan

chr1sjordan wrote: »

Can't you balance transfer to another 0% rate?

I don't have any at the moment. I am looking at the possibility of lodging a complain

madhusudhan

dylanuk wrote: »

There's a few news headlines going around about this - basically the government aren't happy with the cc companies and they've been having meetings to try and get the cc companies to act better (http://www.credit-card-comparison-online.co.uk/news/credit-card-news/5-December-2008.html).
....

That's a great news - thanks.

Is there a proper way to make a complain to Financial Ombudsman?

YorkshireBoy

Don't know who you've been speaking to already, but give their customer loyalty department a ring on 0800 783 1116 (during office hours).

_Andy_

It's a variable rate credit agreement thus there is nothing to complain about (although I appreciate the rate is high in comparision to other lenders).

madhusudhan

Yes I understand it's a variable rate agreement. Does it mean that they could take my rate to 40% or 50% or even more. It doesn't sound sensible to me.

A piece of legislation, or some one who had had earlier experience or some kind of formal complaint might help me.

nickmack

madhusudhan wrote: »

Yes I understand it's a variable rate agreement. Does it mean that they could take my rate to 40% or 50% or even more. It doesn't sound sensible to me.

A piece of legislation, or some one who had had earlier experience or some kind of formal complaint might help me.

In theory, yes they could hike the rate to 50% or so in line with the T&Cs, however I would hope the OFT would step in if this happened without excellent reason.

BTW, MBNA are very well known for increasing the APR after a promotional period has ended, especially if the customer has a large outstanding balance.

It's one way of the main ways the company makes money, as they know some people cannot shift the balance away.

Unfortunately, it seems you have fallen into this trap. It may be worth reading Martin's stoozing article as this reiterates the importance of moving balances before a promotional period ends.

I think you should concentrate your efforts on trying to move some or all of the balance away, as this would probably be the quickest and easiest method to stop paying this APR.