Virgin & MBNA Spiralling Out of Control! Advise Please!

iambin

Hi.
I have two credit cards, Virgin (MBNA) and Egg. I owe about £12k on each (both are fairly close to the limit). Over the past year both cards have upped the interest to astronomical levels. Virgin is at 34.9% and Egg at 29.9%. They started at around 15% several years ago.

Interest at this level means I am spending 100's of pounds per month and cannot afford to do so. I am not clearing the balances anymore as I dont have the cash.

I called both of them and asked them to reduce the interest rate but they both said "We dont dont do that" but Virgin did reduce the interest on my balance transfers (the majority of the balance) to 29.9%.

My credit rating was excellent for years but has dropped off recently and I think this is why they have increased the rates. Its like a vicious circle.

I earn OK money but have morgages too and I am struggling to stay alive now due the the credit card problem.

I am considering writing a complaint letter to them referencing the Treating Customer Fairly legislation as although I appreciate the fact that credit card interest is variable, an increase from 15% to 35% doesn't seem fair and isn't how I expected the finance product to perform. Failing that I guess I go to the ombudsman.

Any advice or similar experiences would be well appreciated!
cheers
Bin

lainemd

Hi we did the same a few months ago with MBNA and got the shock of our life when we worked out the the interest had gone from 4.99% to almost 32%, we shopped about and changed balances to 0% for 13 months with RBoS, worth a try, in 13 months time if still balance will change again
good luck

iambin

Thanks Iainemd. Unfortunately I think I am at a point where I have run out of credit and so getting a 0% card may no be possible. I applied to Barclaycard through a mail shot they sent me and they rejected the application. I am doing another through halifax but even if they accept the application I dont expect the limit to be very high.

lainemd

you say you have an egg card have you approached them for a loan to clear the cards, at least you will know what you pay per month and at least it will have an end date because it will take you a good 20 years to clear the debt with the excessive interest
go to your local Citizen Advice Bureau and they will help you sort out your money and debt better than you can yourself
good luck

ILW

Sorry, but I would suspect thet if you owe £25,000 on cards and are having trouble keeping up, that definately puts you in the high risk category. Credit cards were never supposed to be used as a means of long term borrowing. You truly need to get independent advice.

Rupert_Bear

The reason banks increase the apr is because they want to get the original debt back asap. I think they must regard the OP as high risk.

cloggii

I have just posted details of my success with getting a refund of interest from MBNA. My interest rate too was a whopping 34%. I repaid my balance and then wrote to MBNA complaining abount the interest rate. MBNA refused to refund any interest whatsoever. I then took my complaint to the ombudsman which resulted in MBNA being ordered to repay all interest that was charged to my credit card since it was opened. Last week I received a cheque from MBNA for £3000. So it is certainly worth complaining about your interest rate. If you cannot repay your card you may be able to transfer it to another lender with a better interest rate ?

iambin

Rupert_Bear wrote: »

The reason banks increase the apr is because they want to get the original debt back asap. I think they must regard the OP as high risk.

I'm not sure this is the case. I think they are trying to milk as much out of me as they can because they know I will try to pay it until I cant. At the end of the day they have probably got about half back in interest so far and I still owe the balance. If I paid it all off tomorrow their ideal situation would be to lend it back so someone like me at a ridiculous interest rate!

fozmcfc

lainemd wrote: »

you say you have an egg card have you approached them for a loan to clear the cards, at least you will know what you pay per month and at least it will have an end date because it will take you a good 20 years to clear the debt with the excessive interest
go to your local Citizen Advice Bureau and they will help you sort out your money and debt better than you can yourself
good luck

This to me is good advice. I had an Egg card and when I applied for a loan they offered me the chance to incorporate my card balance into my loan, I rejected it cause I got a 0% balance transfer, but that's by the by.

You could at least extend your payments over a large period and keep the payments down. Although unlikely they may agree to up your credit card limit to enable you to transfer the other outstanding credit card balance and give you a loan to cover the whole lot.