Good Old MBNA

battyboimatt

I now understand how easy it is for people to get into debt, I have a small balance on my MBNA card £901 and the miniumum payment is £25 so if i paid only the min payment my intrest next month would be £24.14 which means I would of paid wait for it £0.86 pence of the balance I owe. My god, compaines shouldn't be allowed to do this, i mean its not a problem as i always pay a couple of hundred quid off per month, but im just saying how people who dont have the money would get caught in this, and they would be paying it forever

YorkshireBoy

Someone on another thread was complaining that Amex had just doubled their minimum payment from 2.5% to 5%.

Others grumble because they switched from MBNA to A N Other card provider and then realised that some providers charge 3% per month...and not the £25 that MBNA do.

Card providers can't win can they!?

battyboimatt

It's not the fact of the low payment, you missed the point, the point is yes its low and if i couldnt afford it fine, but all i would be paying off every month is 86p off the balance it was to post out no wounder people get in debt, at 86p per month it would take me 108 months to pay off £101.48 which is 9 years so to pay off the 901 it would take me just under 80 years soif i was to pay the minimum balance every month factoring in my current age I would be 107 before i paid it off providing the intrest rate did not go up and down by then, and esh what a flame down, no wounder people dont like to post in case they get there head bitten off, I dont think I will anymore ill go back to lurking only

YorkshireBoy

battyboimatt wrote:

you missed the point

Hmmm...don't think so (you were highlighting the dangers of only making the minimum payment on a debt), but you missed mine - totally!

There are only three factors determining how fast your balance reduces:

1. The amount of new spend placed on the card.
2. The interest applied each month.
3. The amount you repay each month.

If you *choose* to pay only 86p off your balance, that's your problem, not the card provider's...isn't it?

So, when the lenders, as in the two examples I gave earlier, decide to *help* the customer reduce their balance faster they are met with resentment. And before you raise the issue of the interest rate applicable, then that's set by risk-based pricing. If the risk (of them not getting their money back) hasn't changed, then one of the few things the lender can do to *help* the customer is to increase the minimum payment amount (others include blocking the card or lowering the credit limit). That's a win-win situation isn't it?

Just to address a couple of your points in your second post:

no wounder people get in debt

People don't get in debt by only paying the minimum allowed (as you've proven with your [albeit very small] 86p reduction each month). They remain in (significant) debt by spending money without the means in place to repay it within a reasonable timescale. Yes, things happen, but if you only spend what you can repay at the end of the month you'll never get in (significant) debt will you?

and esh what a flame down, no wounder people dont like to post in case they get there head bitten off, I dont think I will anymore ill go back to lurking only

Flame down? Did someone else post (and then delete) after me?

Degenerate

I too would like to say good old MBNA. They give the highest credit limits, allow the lowest minimum repayments, and offer the best loyalty offers of any mainstream UK CC provider. This makes them a very handy, flexible financial resource for those of us capable of managing our money responsibly.

It irritates me to see them criticised for the very things that make them the best. Yes, if you're careless you can end up shooting yourself in the foot with such a powerful financial weapon. I know it's out of fashion, but personally, I'm still a believer in the whole "personal responsibility" thing for grown adults.

gc01_2

I've just ended an interest free period with MBNA. My statement tells me that I will now revert to a Standard Monthly Rate of 2.5292% per month.
I thought I'd give them a call as the annual rate works out at 30.3504%!
I'm sure that wasn't the standard variable rate I was quoted 12 months ago but I can't prove it.
Good enough they have a freephone number - when I got through I explained the situation- the rep told me that my rate was actually 34.9%. He confirmed that I have a 100% good payment record and he has no idea why I'm being charged this rate.
I have a fairly well paid job and I thought my credit limit reflected that. Over the last 3 months I have paid off large amounts as I was coming to the end of the interest free period, however I still have an outstanding balance. The latest statement shows that if I do not pay off the balance in full, I will be charged double the minimum payment in interest!

Quite unbelievable you might be thinking - well that's what the customer services rep thought, but he could give me no explanation as to why I am being charged 34.9%. He told me that their standard variable rate is 17.5%.

As it stands, if I was to pay the minimum payment, I would increase my debt each year and never pay this off.

I must be very careless, because I've always paid more than the minimum payment, I have a very good credit record(I subscribe to experian who let me know that), and I've never missed a payment. I'll post an update tomorrow after I've spoken to the 'Rates' department!

RichyRich

Once I remember getting a Barclaycard statement with a minimum payment of (say) £5 and an estimated interest cost of (say) £5.51, so if I'd have just paid the minimum payment I'd be further away from getting the balance down!

Never affected me as I always pay in full, but I thought it was a bit cheeky of them. Notwithstanding this, it's our own responsibility to ensure our affairs are managed correctly.

Geenie

battyboimatt, don't go. I think everyone is trying to explain. If you borrow money, you have to pay for doing so. CC's make their money from people like yourself who never pay off in full.

Have you considered what that item for example, you bought on your credit card at £50 is going to cost you at the end of the day, in fees and interest, compared to just paying the amount in cash at the time!!

Look at the cost of what you buy in the shop, and what you actually end up paying using a CC and not paying the balance off over a year!

Has what you bought been worth lining other peoples pockets?!

speedbird1973

What's bad for some is good for others. If you have your money stoozed then the lower repayment the better.

Likewise in tough times if you make a minimum payment you may only reduce the balance by £1 a month, but you may be able to service the debt without falling behind until things improve for you.

Bottom line is you can and should overpay if you can afford it. There'a nothing to stop you.