Treasury Committee launches inquiry into Credit Searches in conjunction with MSE

edited 6 October 2009 at 7:18PM in Credit Cards
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  • I had an Egg card and an Egg loan... I decided it would be a really good idea to try and consolidate them both into a single loan as that way I'd be able to completely pay them off over 7 years and should be paying less interest than I was paying on the Egg credit card and loan combined.

    I worked it out using the APR (around 9% if I remember correctly) on my existing loan and my payments were affordable, so I went through the hassle of filling in all the forms online to get this consolidation loan. The forms had sections to allow paying off existing loans and even cards... after spending a while filling in the online forms, and having a credit check, I got to the final page where it told me that they would do me the loan I wanted... only at 29.9% APR! This made the payments significantly MORE than the credit card payment and the loan repayment together and meant that the total interest I was to be paying was MORE than both the previous card and loan added together!:mad:

    When I called them to find out why, I was told that "that's the way the system works... You've already got a loan and a credit card with us" and they simply didn't want to hear that I was struggling to pay after getting a pay cut from work, hence wanting to consolidate my debts with them...:confused:

    In the end, this forced me to look into other avenues, from which I discovered that my Egg card agreement is un-enforceable and so I've got a case going against Egg to get the card written off entirely! :rotfl:
  • edited 23 September 2009 at 10:53AM
    kadieakadiea Forumite
    77 Posts
    edited 23 September 2009 at 10:53AM
    You very rareley get the 'typical' APR rate or as I call it the 'temping' APR rate, it is obvious that the apr rate is there to make you apply. My dad got a tesco clubcard credit card, was offered the usual 12 month BT 6 month Purchases. My dad has a spotless credit history, fully owned house, assets and high income. But when he applied they offered him 19.9% even though the 'typical' APR is 16.9. It may only be 3% but credit shouldn't be expensive just because the banks !!!!!!ed up. Oh and you don't have to miss a payment or have a lifestyle change to get your Credit Limit dropped just be a customer. They will decrease your limit so that next time you get your statement you're overlimit, or you get declined in the shop. Then you get 'overlimit charges, fair enough when payments were not direct and the transaction system relied on little slips of paper but NOW what's the point?
    Why let a credit card go overlimit, and usually only by about £20? oh sorry I forgot, so that everyday people have to hand their hard earned money over to the bank, it doesn't matter if the children have school trips, the bankers have to put their children in private school. Oh and if you start using your santander card all the time for everyday purchases and paying off the balance in full, expect a letter telling you your accout it being closed because you are not using your card enough!!! On top of the fact you were offered 15.9% and got 22.9%
    - HSBC Premier - Mastercard £9,000 - Overdraft £6,000 - MBNA Platinum £3k (£2,500 @ 0% SPENT) - American Express Platinum £6,100 - Coutts Classic Card £5,000 - House Of Fraser Recognition Mastercard / Santander Cards £250 -

    - Bank Americard Limit $3100 - Citi Mastercard Limit $700 - WalMart Discover Card $2,500 Limit -
  • never-in-doubtnever-in-doubt
    20.6K Posts
    ✭✭✭✭✭
    j-dub wrote: »
    In the end, this forced me to look into other avenues, from which I discovered that my Egg card agreement is un-enforceable and so I've got a case going against Egg to get the card written off entirely! :rotfl:

    Can I just point out to any neutrals, the card/debt is not "written off completely" but merely unenforceable (huge difference). Have a read here if you want to see the actual process: Unenforceability & Template Letters :beer:
    :o 2010 - year of the troll :o

    Niddy - Over & Out :wave:
  • edited 26 September 2009 at 10:23PM
    Moggles_2Moggles_2 Forumite
    6.1K Posts
    edited 26 September 2009 at 10:23PM
    Credit cards have always been issued subject to status, but the rate-for-risk policy currently practiced by some lenders, takes things to a new level. The advantage to the lender is obvious. Their market-leading deals are heavily advertised to draw in new customers. If this results in a flood of applications (even though, in reality, they're dishing out something less attractive to large numbers of applicants), they're laughing.

    In more than a decade of card shuffling, I personally have not been treated to rate-for-risk (yet), but judging from posts to this board, there's a lot of it about now, with many victims left unaware that another deal has been substituted, until the card and paperwork arrives in the post.

    As always, it's the most vulnerable that are hit hardest. If you're paying crippling interest rates on a debt, the last thing you need is several more weeks of wasted time and effort, because your chosen lender sent you a substitute card, which is just as expensive as the last. Many suspect that there was never any real intention to issue the advertised card, although there's no doubt some applicants get the flagship deal. (Is anybody checking the success rate and, if so, how often?)

    Barclaycard and Capital One are among the worst offenders, but the worry is, that if they're allowed to get away with it, the practice will spread.
    People who don't know their rights, don't actually have those rights.
  • I took out a loan with Alliance & Leicester in February 2008, they advertised an APR of 7.1%, which was one of the most competative deals on the market at the time; so, I called them up and proceeded through all of the questions to find that I had been accepted for the loan, however the interest rate which they were offering me was 8.9% APR.

    Although the rate offered was somewhat competative, i did know the ramifications of my application having an affect on my credit rating, so I accepted the loan at that rate. A few months down the line I wanted to borrow an additional sum, so returned to Alliance and Leicester who approved my additional borrowing.

    However, what they didnt tell me until after they had approved my additional borrowing was that they would lend me my original borrowed amount with the additional borrowing on top, then deduct my existing loan from the new loan and then apply an interest rate of 11.6% APR onto the whole amount borrowed!

    I was quite put off actually looking for a better deal than this because I now had two credit checks carried out against my file in such a relatively short period.
  • dnrcdnrc Forumite
    10 Posts
    my quick story:

    about a year ago i wanted a 4 grand loan to buy a car.

    I looked around and eventually applied for a barclays loan at 8%

    I have a good credit record and rating but when i got a letter a few days later i had been accepted, AT 30%!!

    Needless to say i told them to do one and went elsewhere.
  • Some banks and Building Societies do something called a 'soft score' on a loan which means that you find out what rate you are being offered without actually having the impact on your credit scoring.

    I know that Nationwide do this and think that some of the other smaller people do aswell but i'm not sure about the big players like A&L, HBOS etc
    :beer:
  • mhoward18mhoward18 Forumite
    2 Posts
    First Post
    MoneySaving Newbie
    hello,

    i have not applied for a loan lately but i remember applying for one a few yrs ago. i found it very frustrating. I hate the advertising like such as.... x-amount from 5.9%apr. They cover themselves by saying "FROM" but this is not good enough. i have got a very good credit rating but i am self employed witch tends to go against me.
    when i applied for a loan at 5.9% i ended up getting a rate of 7.9% it wasnt a bad rate but still whats the point in responding to someones add making you belive you are going to get a very cheap loan when thats not what you get. As for price comparison site its the same situation.
  • A year ago I had to apply for a loan to help out in a family crisis, the company had sent me a letter saying I was pre approved advertising a 7.9% apr. I applied and ended up having to take a loan over 5 years at 29%

    Desperate times unfortunately called for desperate measures but needless to say Im now trying everything possible to finish this loan ASAP. Unfortunately I cant keep searching for a better provider as this afects my rating!!!!
  • I had this issue a few years back when I applied for a car loan with Alliance & Leicester (I think, it was certainly one of their subsiduaries). They quoted an interest rate of 5.8% (and were recommended on this site) so I applied on their web site. After 10 minutes I got an email saying my loan decision was through but I had to telephone them to get it.

    I phoned the number in the email and had to go through the whole application again. The guy I was speaking to asked me on numerous occasions if I wanted the PPI. Each time I said I wasn't interested but he kept coming back to it. Eventually I told him that I was not interested and please not to keep asking. He then told me my monthly repayments would be around £50 more than the online application had quoted me and when I questioned it he simply said 'That's your rate' I told him I wasn't interested in taking the loan application any further. I later discovered the only way anyone had got the advertised rate of 5.8% was to say they would take the PPI but then cancel it or simply not sign that part of the loan agreement.

    I then had to telephone Northern Rock (this is a few years back before the current problems and they were also quoted on this site with loan rates of 5.8%) and explained the whole situation to a nice lady and said to her that I was only interested in taking the loan at the rate advertised and when she did the credit check she would see the search from A&L but would she please ignore it as I wouldn't be proceeding with that application. Thankfully I had no other debts (bar the mortgage) at the time and have an excellent credit record.
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