Taking Virgin Credit Card (MBNA) to the Financial Ombudsman. 35 % APR is 'unfair'

mrjohnmiles

I am in similar situation but the MBNA directly, I have a suspended account as they felt that they could not renew my card when it expired. But when your account is suspended your interest rate is locked in. I do not dispute that I spent the money but now I am trapped at a large interest rate with this provider.

I would have suggested that for suspended accounts a rate of say 20% max above base rate would be better, as this allows the customer to bring their finances back into order, and make more money available for purchases (looking at it from MBNA's point of view.

I would be very interested to hear your outcome and I am now considering approaching the Financial Ombudsman for some advice myself.

duggie1982

I feel for you, but when you take out the card with the offer it clearly tells you your APR in the credit agreement so you know how much you pay after the offer

Moggles_2

... our other credit cards are under 15% APR and Virgin is 35%.

May I ask which other cards you hold at the mo and which ones you've applied to unsuccessfully?

CannyJock

Your husband might have more luck applying for cards if his income is higher and the existing card is in your name.

I'd also think about applying for more than one card to move the balance over - sure it'll cook your credit rating for a short period of time, but worth it if you ask me.

Typhoon2000

duggie1982 wrote: »

I feel for you, but when you take out the card with the offer it clearly tells you your APR in the credit agreement so you know how much you pay after the offer

I think you'll find most people who take out and are accepted for the Virgin card get the 16.8% or whatever the adverised rate is after the 0% period ends. What happens is a few months before this interest free period ends, they put up the rates to silly levels. Its seems from mine and other peoples experiences, that if you are only paying the minimum amount during your 0% period (and why wounldn't you its interest free), they are far more likely to raise their basic rate.

Maybe they think that they are not making any money out of you, so may as well raise it to a silly amount as you may not be able to pay it all back in one go when the promotional periods ends and they make a few hunded£ before you collect the money together or find a BT deal (harder to come by if your already maxed out one credit card, paying the minimum (MBNA are one of the few CC companies that mentions on your credit report that you have only being paying the minimum) and credit limits will tend to be lower with new cards as your credit report will already show you are ladened wth debt and can only pay the minimum.

Maybe they think you will never be able to pay it off, all you'll ever manage is the minimum. May as well then raise the rates to 35% to make as much money out of you before you die financially (they know you never going to go on for the 50yrs and £600,000 odd it will take to clear your account). Heck, if they are lucky they may get back more than they actually lent you in a couple of years, but still show you as owing the £8000. Or better still you may be able not abe able to make the minium after a while and your debt will increase exponentially. They'll let it go for a few months till a nice wad of interest has built up, then they can sell this £30,000 debt to someone else to chase. They might even be able to get this written off as a loss on they tax account.

But then maybe I am just a cynic.

grumpytoo

chattychappy wrote: »

I'm not clear...

When you say "In addition, they have repeatedly increased our credit limit so that we can no longer shift our balance from Virgin to another credit card provider since they will not take the whole amount as a balance transfer."


Are you you saying that you then took that extra credit? I think this is important.

If the problem is that they gave you extra credit limit (which you didn't want/use), and this extra available credit made other providers nervous about extending you credit, then I think the case is very strong. Afterall, they have effectively monopolised your access to credit and are (potentially) abusing that position. But surely the remedy is simple: you ask them to reduce your credit limit and not offer further increases. Of course this might not necessarily improve your credit rating if it makes your utilisation look bad (ie you've taken all your credit).

If the problem is that they have extended you extra credit which you have then taken, then I feel you're a bit stuck. If other credit card companies won't give you (or your husband) credit at all, I think MBNA can argue that their rate is fair. After all, they are taking a risk that no other provider is prepared to take.

MBNA are a bad company, I've been with them for far too long. Originally I took out an Alliance & Leicester card principally because of its "90 day worldwide protection on purchases" (and I still have the pamphlett). Over the years the credit card operation changed hands several times. I seem to remember Chase Manhattan Bank, Atlantic, and finally MBNA. At the age of 60 I started buying nauticalia (boat stuff) to play with in my retirement. Most noteworthy was a twin axle boat trailer which was stolen a few days after I got it home. When I tried to claim I was told "That's a motor vehicle accessory - its not covered - read your booklet!" (the one I never had until I claimed) Another problem was 200 metres of CCTV cable which I bought. PayPal was used funded by MBNA credit card. Only 100 metres of cable arrived! PayPal were not interested "Only delivery of goods is covered, not the attributes of the goods". Aw c'mon that's splitting hairs, 100M of cable was never delivered! MBNA were then tackled "Ring up Trading Standards" was their advice! Third world country I call it.
More recently after a bout of heavy spending (chiefly a diesel genset for the house) I had a large credit card bill of about £1700. Eventually I drove 50 miles to the town where the banks are and got a building society cheque (bankers draft) made out for the full amount. I paid this into the Co-op bank, the one that MBNA use, as this way there are theoretically no interbank transfer delays. Got stung for a £12 late payment fee and approx £32 interest charge as the money "arrived a day late" (paid in on the 10th and due date 13th - which is a Sunday!) In 2009 MBNA sent out an awful lot of statements with the due date on a Sunday. In my opinion this is just a trick to get fines and interest from people. Amazingly this months statement has the due date of January 15th which is a Friday but even this isn't brilliant because the statement was not received until the 7th so there are very few spare working days. Incidentally in the good old days the payment date was at the end of the month. Gradually the due date came further and further forward and the Sunday trick was introduced as well. Unless they refund the charges they'll be loosing this customer, I've had enough!:mad:

chattychappy

grumpytoo wrote: »

I paid this into the Co-op bank, the one that MBNA use, as this way there are theoretically no interbank transfer delays. Got stung for a £12 late payment fee and approx £32 interest charge as the money "arrived a day late" (paid in on the 10th and due date 13th - which is a Sunday!)

Well.. I think it was optimistic paying in on a Friday knowing that Sat/Sun are not banking days, even if it was a building society cheque (it's not cleared funds).

Don't want argue with the gist of what you say... the thread is old and I wondered what happened to the OP?

CannyJock

grumpytoo wrote: »

Got stung for a £12 late payment fee and approx £32 interest charge as the money "arrived a day late" (paid in on the 10th and due date 13th - which is a Sunday!) In 2009 MBNA sent out an awful lot of statements with the due date on a Sunday. In my opinion this is just a trick to get fines and interest from people.

It's a trick that only works against people who don't have DD's setup to pay at least the minimum - or for those who don't like DD's for whatever reason who don't pay in plenty of time per the card payment clearing times.

Wow, first day back on the forum this year and already a "DD would have avoided this" answer Ta much

Double-points for resurrecting a necro-thread

If you check every few days you'll see other new threads agreeing with you that MBNA are renowned for increasing interest rates. Think I've read 3 or 4 on the first page while doing a catchup on posts so far.