MBNA turning the screw

crunched79

Hi all,
I am new to here and looking for some help.

About 3 months ago MBNA cut all my credit limits on the 3 accounts I have with them.I assumed it was normal practice as they were reducing risk due to the crisis. I have never missed a payment but unfortunately only pay the minimum amount each month as that is all I can afford. When I re-read my statements I realised the APR was now standing at around 30% which is a lot more than when I first took the cards out and certainly a lot more than they advertise when looking for new business.
I have now received my latest statement on one of the cards and see they have hiked the minimum repayment up by an extra £100.Usually the minimum payment was a few pounds more than the estimated interest for the following month and I fully appreciate that it would take forever to pay off the debt at that rate.

However am worried they will follow suit with the other 2 accounts and if so, there is no way I can find a further £200 on top of the extra £100 each month.

I've read that some people are being treated pretty shoddily by MBNA's customer services and I was wondering if anyone has a few tips I could use when approaching them? Is it best to write or to call? Once I have contacted them about the one account then no doubt this will put them on notice I am having difficulty and will put them on alert with the other accounts.

I know they want their money back but by hiking interest rates to almost double the original agreement when the base rate is 0.5% certainly takes the biscuit. Afte rall aren't they to a large extent responsible for this mess and now increasing the misery factor? At this rate we shall see more and more people going to the wall and the financiers losing out as they will never recover their money. This of course does not condone me racking up debt but helps to get it off my chest.

stephane_2

Did they warn you before hand that they were about to increase the APR of your credit card. I don't know what is your financial situation but if you have a good credit history and would advise you to check your report on experian/equifax and see if you can apply for a card with good balance transfer deal. Just to give you an idea that with let say a £500 balance on a 30% CC and paying only the minimum each month, it will take you over 40 years to pay it off!!!!

YorkshireBoy

crunched79 wrote: »

I have now received my latest statement on one of the cards and see they have hiked the minimum repayment up by an extra £100.Usually the minimum payment was a few pounds more than the estimated interest for the following month...

They used to have an "interest + £5" calculation, but I believe they now operate with a "£25 or 1%, whichever is the greater" calculation. Maybe that's why?

It's still one of the lowest rates around though. Only BoS have a similar 1% payment...everyone else is between 2-3%. So even if you could shift the debt elsewhere you probably couldn't afford the repayments?

hiking interest rates to almost double the original agreement when the base rate is 0.5% certainly takes the biscuit

The BoE rate has no relevance to your APR setting. They've assessed the risk to themselves and decided that you are only treading water, and not making significant inroads into your interest bearing debt. They think their capital is at risk, so are trying to make their money back in revenue instead. You've probably brought a little of this on yourself by only making the minimum payment. Had you paid more I suspect the increase wouldn't have been as large.

If you want to talk with them, the best people to ring are customer loyalty. Call 0800 783 1116 during office hours.

Karl.H_2

Good morning crunched79, and welcome to the forums.

First thing I would do it contact customer service and enquire why the APR has increased and your minimum repayments too. Then, if you are unhappy with their response search for a Balance Transfer (BT) card and move your debt over to that. You will pay a fee (usually 2.5% of your debt) for the transfer, but this will save you money in the long run if you get a card with 0% on BT for 12 months, for example. Furthermore, once you have moved to a BT card with a 0% for x months, you won't pay interest until the introductory offer expires; i.e. after x months.

Can I ask what other two accounts you have?

For more information, read the following article. If you have any questions please fee free to post back on here. Once you have chosen a BT card, post the details here and people will be able to advise you and answer any questions.

crunched79

Stephanie - I only got a warning of the increase on one card which was a take it or leave it scenario. ie. either we close the account and you pay us back on a monthly basis or accept the higher rate which was only about 2% above what they were already charging.

I have never defaulted on any payment in my life however there is a first time for everything as I have been out of work for quite a while and get by on selling what is left of some of my investments and a monthly works pension.
I will try obtaining my report to see what's lurking there and redouble my efforts to obtain work...not easy when you hit 60 though.

crunched79

Karl H - MBNA platinum Visa which prompted me to write, MBNA Mastercard and Abbey which was the old Abbey taken over by MBNA.
I will try and apply for another BT card but as I am not working don't hold out much hope in that department.

stephane_2

Maybe you should inform them of your situation (not working, pension..etc) and say to them that you cannot afford the demanded payments. You may be able to have a temporary freeze on interest payment. It is worth a try. In your situation, a new credit card may not be the solution. Best of luck

crunched79

Thanks for the explanation Yorkshire Boy and I will give them a ring on that number.

Thanks also to all others who have responded.

I must say I have not found it easy to air my laundry in public even though it is anonymous and appreciate the help offered.

CannyJock

stephane wrote: »

Maybe you should inform them of your situation (not working, pension..etc) and say to them that you cannot afford the demanded payments. You may be able to have a temporary freeze on interest payment. It is worth a try. In your situation, a new credit card may not be the solution. Best of luck

Do you know anybody who has done this successfully? How did it affect their credit report - was there a note added to the effect that they were on a payment plan?