Rate Jacking Article Discussion

DebtMagnet

Yes Cell that's exactly my problem with the whole situation........just who do they actually WANT as a customer these days?

I always had a very good relationship with all my credit card companies and the reason for that was due to me having large debts, that I always made the required payments on without fail, therefore they had their nice chunk of interest every month, and also knew they could rely on that interest for many months to come........a perfect customer to my mind.

I could understand them wanting to get rid of people who paid off the balance every month and people who tarted from card to card as they didn't make them any money from them. But I have had large balances for years and they always got their money by hook or by crook.

So I think you are right in your suggestion that they are simply targeting their trusted 'easy money' customers as they know full well they will do whatever they can to pay up as their account history suggests they always do. And that's the thing, I have even turned to the devil himself (in the guise of payday loans) just to make sure I pay my debts.......so you could argue that their little tactic is paying off. I will not let the account default while ever I can go and get more and more jobs (I'm just about to start a 3rd next month) and so ultimately, they are winning while I am wasting my life away working all hours just to make ends meet when this time last year I was doing ok. And all this at a time when the interest rate is at all time lows too........makes me sick really.

I wish I had the attitude of not caring as I would so love to tell them where to go and just go bankrupt and see how much they got from me then, but instead I'll just carry on working my butt off in the vain hope that one day I'll start making some inroads in to this mess

Thanks a lot Bankers!

klint

I have a few thousand pounds' balance on my Tesco Clubcard credit card (issued by Royal Bank of Scotland) at the promotional rate of 7.9% "for life of balance" (their words in their promotional leaflet). I don't use the card for anything else. I have always paid the minimum payment on time, by direct debit, both on this card and all my other cards.

In my August statement, in the small print, there was a small paragraph saying the rate will be 17.9% from my October statement (thereby giving me 60 days notice). This is the only notification I have ever received about this. There is nothing about it on my September statement, which simply shows the applicable rate at 7.9% with no inidication that it is about to change.

In fact, I only noticed the notification in my August statement after reading this MSE article and deciding to check my past credit card statements very carefully just in case. I was surprised to find this as I have given them no reason to suspect I'm a poor risk. I think they were hoping I wouldn't notice, and then I would be stung with having to pay a whopping 17.9% on my balance. Why else would they not remind me in the September statement and send me a letter to make sure I know about the change? Also, I think this makes a mockery of the phrase "life of balance."

Bottom marks to RBS.

NickX

klint wrote: »

I have a few thousand pounds' balance on my Tesco Clubcard credit card (issued by Royal Bank of Scotland) at the promotional rate of 7.9% "for life of balance" (their words in their promotional leaflet).

They cannot increase the rate on a "Life Of Balance" deal provided you remain with the Terms and Conditions.

Therefore I think you will find that you will continue paying 7.9% only and it is the standard variable rate which is being increased to 17.9%.

You will not have to pay this increased rate provided you make all your Mimimum Payments before their Due Dates.

I suspect you may have been unduly alarmed.

Cell

Indeed. This happened to me on my Amex 4.9% LOB Transfer (I believe that there is a thread about it in here somehwere). They increased the basic rate and also, for those who were not using the card in any other way, an increase in the minimum payment to 5% of the balance.

However my LOB rate has not increased.

Now, however, I have had to spend on the card (all of £4.49) to ensure that I don't get stung with the £20 dormancy fee.

You sure do have to keep on top of these organisations;)

HEDGES295

At last somebody is adressing this issue...

I have experineced this with Barclaycard. Oddly I have two Barclaycard accounts one they hiked the rates to 26% about a year ago no letter just changed on statement.

No late payments, perfect credit history just pay minimum amount each month. complained told they have contract so can charge what they want, I asked for Contract in december which they still have not supplied despite constant reminders, but advised "the application form did not have the interest rate shown" (didn't ask for this info)

wayoflife

I personally don't agree with arguing against a rate increase, all terms and conditions clearly state that providing there is at least 30 days notice then they can increase your APR...

You have to remember that card companies are a business just like everything else

Please try and think from the point of view of the card companies...
if you were running a business and all of a sudden, you hit a massive stumbling block (the fact that they had to refund credit card charges and lower their charges and fees) surely you need to do something else to recoup their money? even the merchants fees (charged by VISA/Mastercard to the shop etc.) have been cut.

if people insist on this argument aswell then all that will happen is that an annual fee will be introduced for everyone and people that pay their balance off in full will be penalised unfairly.

Another point to make is (sorry to sound generalised and flippant) that the credit crunch was in essence borrowing more money than was reasonable and realistic to pay back within peoples means- both people and large financial institutions- so why should anyone make it easier to borrow money?? What should be argued is the ridiculous interest rates offered for savings... if noone saved any money, there wouldnt be any money for banks to spend...

before anyone asks im not a pensioner I am in my 20's

I can understand the frustration of people and see their point of view but I dont agree at all,
Does ANYONE share my opinion!!?

Cell

wayoflife wrote: »

I personally don't agree with arguing against a rate increase, all terms and conditions clearly state that providing there is at least 30 days notice then they can increase your APR...

You have to remember that card companies are a business just like everything else

Please try and think from the point of view of the card companies...
if you were running a business and all of a sudden, you hit a massive stumbling block (the fact that they had to refund credit card charges and lower their charges and fees) surely you need to do something else to recoup their money? even the merchants fees (charged by VISA/Mastercard to the shop etc.) have been cut.

if people insist on this argument aswell then all that will happen is that an annual fee will be introduced for everyone and people that pay their balance off in full will be penalised unfairly.

Another point to make is (sorry to sound generalised and flippant) that the credit crunch was in essence borrowing more money than was reasonable and realistic to pay back within peoples means- both people and large financial institutions- so why should anyone make it easier to borrow money?? What should be argued is the ridiculous interest rates offered for savings... if noone saved any money, there wouldnt be any money for banks to spend...

before anyone asks im not a pensioner I am in my 20's

I can understand the frustration of people and see their point of view but I dont agree at all,
Does ANYONE share my opinion!!?

For the record I still await a response from Capital One in connection with the 30 clear days notice point. I suspect that they are hoping I have gone away.

As for the remainder, well, yes, in an ideal world you would be correct. There are many people who have got way out of their depth, and if they're posting on here they're at least addressing their demons and trying to fight their way out of it.

The fact remains that many people, even those paying back as fast as they can, are being pushed backwards by the tide of rate increases. A percentage here or there, yes, but for some the rate is nearly doubling overnight, and that defies most people's budgets or ability to cope, especially in those cases where people have faithfully kept their side of the bargain.

And remember those 'stumbling blocks' that you mention arise out of decisions made in the courts etc that they were acting unfairly in the first place. Logically what you're saying is that a credit card company has to recoup the losses it is encountering because it can't carry on overcharging its customers any more. And we're supposed to understand their position?

This all leads to conflict, and sites like this, which champion individuals' rights on a collective basis. Without it we are statistics and can be treated like we don't matter (see my Capital One situation). MBNA have been the subject of an adverse decision today, the full implications of which remain to be seen.

If credit card companies didn't treat us like dirt this forum would basically cease to have a purpose save for comparing rates and the like. As it is it is a small, but important, bulkhead which gives us a voice.

wayoflife

Cell wrote: »

For the record I still await a response from Capital One in connection with the 30 clear days notice point. I suspect that they are hoping I have gone away.

Capital One have a very bad reputation IMO and I agree with you if they genuinely didnt give you the correct notice. I suspect this is the case, after being with them for over a year I didnt recieve a credit limit increase, but they dont want people who pay their cards off each month in full...anyway I digress...

As for the remainder, well, yes, in an ideal world you would be correct. There are many people who have got way out of their depth, and if they're posting on here they're at least addressing their demons and trying to fight their way out of it.

I have helped people that have been in debt and Im not saying they shouldnt be helped, I agree that facing the problem and having a plan as to what to do and following it through is the right way to do it...

The fact remains that many people, even those paying back as fast as they can, are being pushed backwards by the tide of rate increases. A percentage here or there, yes, but for some the rate is nearly doubling overnight, and that defies most people's budgets or ability to cope, especially in those cases where people have faithfully kept their side of the bargain.

As far as saying that some companies have doubled overnight please give me a list of companies which have done this, granted I dont keep up with APR purchase rates as I dont pay interest but infact M&S (who I was with for 3 years) had had theirs up at over 20% at some point, its now at 15.9%, which is the same as when I opened it.
I think the companies you are talking about are sub-prime companies who are norotious for high interest rates in the first place, take a look at the various MSE guides of google it.
People keeping their side of the bargin is something that should happen, not something that should be praised, if someone misses a payment, then the interest from the money that they have borrowed (granted, its not what would have been charged to the customer, but still an amount) will have to be recouped elsewhere.

And remember those 'stumbling blocks' that you mention arise out of decisions made in the courts etc that they were acting unfairly in the first place. Logically what you're saying is that a credit card company has to recoup the losses it is encountering because it can't carry on overcharging its customers any more. And we're supposed to understand their position?

This is a grey area. Im sure you dont agree to every decision thats made in the courts, the outragous claims that people are making for some accidents and injuries for example, these costs are all eventually payed by the taxpayer. Why dont we have a go at microsoft for producing software for 4p and selling it for £400. Or pharmesutical companies for pricing people out of the market for cancer drugs? Sorry to sound flippant and I respect your opinion, but what im saying is how far do you take it? Do we have an analysis of every business that operates in the UK?

This all leads to conflict, and sites like this, which champion individuals' rights on a collective basis. Without it we are statistics and can be treated like we don't matter (see my Capital One situation). MBNA have been the subject of an adverse decision today, the full implications of which remain to be seen.

I agree with alot of things on this site, but you must agree that some people will not agree with everything. At the end of the day I repeat my previos point in the form of a question;

Would you be happy to pay an annual fee on your card to suppliment those that have thousands of pounds racked up on their cards?

ramblingtree

Hi Wayoflife.
I do see your points, and I understand fully a business has to make money. However, there are fair ways of doing things and unfair ways. My main problem is with Virgin MBNA. And I will never understand how on one hand they can offer 0% for 16 months for new customers and hike interest rates for current customers to 34.5% in many cases. This to me is crazy. I'm no expert, but if a company is actually struggling to make enough profit, then they shouldn't be able to offer fantastic rates to new customers.
I do not want my debt subsidised by others. But I do want a fair opportunity to pay it back without the company in question using £34.5% interest rates from me to subsidise 0% interest rates for others.

Cell

But surely those who have thousands racked up on the cards are subsiding those who have nothing on them, either by lack of use or by repaying in full?

This, of course, is the reason why dormancy fees are being introduced.

As far as saying that some companies have doubled overnight please give me a list of companies which have done this, granted I dont keep up with APR purchase rates as I dont pay interest but infact M&S (who I was with for 3 years) had had theirs up at over 20% at some point, its now at 15.9%, which is the same as when I opened it.
I think the companies you are talking about are sub-prime companies who are norotious for high interest rates in the first place, take a look at the various MSE guides of google it.

You only have to look through this forum to see plenty of examples. My own interest in this thread relates to Capital One increasing mine from 11.5% to 20%. RBS recently tried to put mine up from 19.9% to 29.9%. I ended it there and then. MBNA are serial offenders. They rushed an increase through on one of mine from 19.9% to 32.9% just before the new rules came into force. Nothing I could say would get them to lower it.

(And I did say 'nearly' double!).

There is ample evidence of mainstream providers doing it - read Martin's initial article on the subject.

People keeping their side of the bargin is something that should happen, not something that should be praised, if someone misses a payment, then the interest from the money that they have borrowed (granted, its not what would have been charged to the customer, but still an amount) will have to be recouped elsewhere.

I think you've misinterpreted what I said. And it depends on what you mean by a missed payment. The interest keeps accruing unless accounts are derelict, and I was talking about people like me who pay on time, all the time, not those who can't or won't pay at all.

But what I did say was that apparently indiscriminate rate increases of amounts well in excess of what you might consider 'reasonable' inevitably ensure that those who are trying to get out of the debt circle are forced to run faster to stay where they are, and for some it might mean that they have to incur a net increase in debt just to keep afloat. This is the reality of debt ridden Britain, no matter how much we wish it was otherwise.

This is a grey area. Im sure you dont agree to every decision thats made in the courts, the outragous claims that people are making for some accidents and injuries for example, these costs are all eventually payed by the taxpayer. Why dont we have a go at microsoft for producing software for 4p and selling it for £400. Or pharmesutical companies for pricing people out of the market for cancer drugs? Sorry to sound flippant and I respect your opinion, but what im saying is how far do you take it? Do we have an analysis of every business that operates in the UK?

I see your point. In fact I am employed as a personal injury claims handler, so have more insight than you perhaps might imagine;). However the courts generally get it approximately right. What has happened is that these credit card companies have themselves been running their finances every bit as badly as the consumer has, if not worse. Their lending decisions, increases in limits and ludicrous strategies to take business away from competitors have come back to bite them in the bum.

However unlike the consumer who took them up on these offers the companies can simply change their rates and terms and conditions. They rely on the contracts that people sign which essentially say that they can do whatever they want when they want. he thing was that in the past they rarely actually did this. Now they are bankrupt themselves they're relying on this 'carte blanche' to strip out their customers. The customers, however, have no such rights unless they are fought for in the courts.

And there is a social aspect to this as well (which is why Mandelson's department forced 'fair pricing' on the industry in the first place). The effects of this deep and vicious 'downturn'has been disguised by low interest rates, almost uniquely amongst post WW2 recessions. The time will come when mortgage rates go up. Unemployment will peak. People will be being ground down by the increased rates they're paying on CCs. There is an absolutely massive secondary bubble waiting to burst. Many people are hanging on at the moment. I speculate that CC companies are getting as much as they can out of debtors before a significant number of them go 'bang'. Ironically, in doing so, they are helping to drive the nail into the coffin.