Credit card company cancels card

mojjie

I have an MBNA card which until recently had a large balance (several thousand). In April I received a kind invitation to either continue using the card at an interest rate of over 34% or keep the existing rate but be unable to use the card until the balance was paid off. I not unsurprsingly declined their kind offer of 34%. I have subsequently paid the card off (bar £50). In attempting to use the card last week I was declined. I rang MBNA who informed me that once the balance was fully paid off they were actually withdrawing my account. Apparently somewhere in the small print was an option for them to do this. I am not actually that disappointed as do not intend to use credit cards again. However will this have an effect on my credit rating? As I opted out of the interest rate hike will it appear as if I opted out of the card which I understand is better than the card provider doing so. Everything else on the account has been fine no late payments etc.

dougharrison

In a similar boat, shockingly I also declined the very generous offer of 34.9% APR, but a condition of opting out is that you can't use the card again (not a problem for me as similarly i am aiming to become debt free too). My understanding is that once you have paid off all sums owing on all credit reports the MBNA account will show as "S" for settled irrespective of who made the decision to close the account, which almost certainly counts as a good thing. From what you say it might be worth having a credit card just to boost/maintain your credit rating and use it either for phone credit or petrol and pay off in full each month as many cards are starting to charge a dormancy fee.

withnell

mojjie wrote: »

I have an MBNA card which until recently had a large balance (several thousand). In April I received a kind invitation to either continue using the card at an interest rate of over 34% or keep the existing rate but be unable to use the card until the balance was paid off. I not unsurprsingly declined their kind offer of 34%. I have subsequently paid the card off (bar £50). In attempting to use the card last week I was declined. I rang MBNA who informed me that once the balance was fully paid off they were actually withdrawing my account. Apparently somewhere in the small print was an option for them to do this. I am not actually that disappointed as do not intend to use credit cards again. However will this have an effect on my credit rating? As I opted out of the interest rate hike will it appear as if I opted out of the card which I understand is better than the card provider doing so. Everything else on the account has been fine no late payments etc.

Surely you've made it clear in your post that you broke the terms of your agreement, by using the card before the balance was paid off?

mojjie

withnell wrote: »

Surely you've made it clear in your post that you broke the terms of your agreement, by using the card before the balance was paid off?

Quite true (having paid it off mid month I forgot to add in the residual interest still clocking from start of statement period until the day I paid it off). The point is I am not fussed by MBNA cancelling it perse - just fussed that it might dent my credit rating if it looksl like I ws effectively declined a card

lisyloo

No, there will be nothing to show anything negative on your credit record.
It will just say "settled".

Rafter

There is an article on MSE about this.

If MBNA think you are a higher risk (which they would if your interest rate offer was 34%) then then can convert your existing debt into a repayment loan and then close your account.

They seem to have decided they don't want you as a customer! They have probably calculated that customers 'like you' with your credit record, income, postcode are more likely to default and therefore don't want you as a customer. Seems a bit stupid when you have clearly demonstrated that you can afford to repay your debt - and that you have been profitable by using a credit card to borrow in the past.

Wouldn't be upset though - as lisyloo says it wont impact your credit record and as credit cards are a very expensive form of borrowing you haven't exactly lost out.

Good luck

R.