Is this right what MBNA are doing?

p00hsticks

vbrindle wrote: »

Can you see where I'm coming from now?

Not really. In your initial post you seemed to be suggesting that the minimum payment that MBNA were asking was less than the interest being charged, and so the balance was going up despite paying the minimum and not making any further purchases - but I can't see that being borne out by the figures you now quote ?

If the rate has only just gone up, you could get your relative to ring MBNA and ask if they will put it down again - I have heard that they will sometimes offer to keep you on a lower interest rate providing you say that you will cut up the card and allow them to close the account. You then simply keep paying off the balance at the old rate until it's down to zero.

ILW

vbrindle wrote: »

What is the point saying this to people who already have a balance on a credit card? I'm sure millions in this position would be wishing they saved up, but the fact is they haven't and it's too late now.

These crooks tempt you to get the card with a good rate then they increase the rate so you can't pay back.

Why can people not understand that credit cards were NEVER intended for long term borrowing. If you want to borrow and payback over a number of years, there are many fixed rate loans available. If you cannot get one then youi probably cannot afford to buy whatever it is .

smartpicture

vbrindle wrote: »

This is what I've found out

September Statement:
Closing Balance: 4,784.60
Minimum Payment: 106.60

October Statement:
Payment: 106.60
Interest: 103.31
Closing Balance: 4,781.31

Can you see where I'm coming from now?

Like the other poster said, I really can't see where you're coming from because the balance is actually coming down, not going up as you suggested. They are charging a minimum payment of slightly higher than the interest, as they are obliged to do, so the balance will continue to reduce (albeit at a ridiculously slow rate which means they'll still be paying it off in 25 years time).

Nikkei

I used to work for MBNA (please don't shoot me :-)) The reason the card is going back over the limit is the interest charged every month is based on a different number of days eg

I have a balance on my card of say £10,000

Over 30 days the interest charged on this balance is £158.40 = to £5.27 per day

So I pay my minimum payment of interest plus my £5 so

£10000 - £158.40 - £5 = £9836.60

To make this easy lets assume I pay this the day the statement is produced and payment hits my account instantly (this wouldn't happen in reality but it's to help me keep the interest easy to calculate for me right now!)

Now my next statement isn't going to be produced for 35 days and interest is accruing on £9836.60 (I'm using an apr of roughly 19%) so my interest is over a longer period of time and works out at £179.21 (9836.60*19% = £1868.95/365 *35) the equivalent of £5.12 per day.

So my balance after paying my minimum and interest last month was £9836.60 my interest is added to my balance the day my statement is produced so

£9836.60 + £179.21 = £10015.81 which sends me over my limit.

The balance is decreasing as the number of days will vary again the following month and be less and the balance will become lower but you need to sort out the going over the limit and fee's incurred because of this to be able to see it. The best advice I would give would be to pay the minimum payment plus half the interest again which would enable your relative to stay under the limit and the balance would start to come down.

The minimum payment only takes into account the interest that has been charged on that statement it does not look at interest you will be charged the following month and you therefore need to keep your balance atleast 2 months under the interest chargeable amount to ensure that any unforseen interest increases/unforseen dd's that you may have on your account don't send you over your limit

Hope this helps
Nikkei

chattychappy

Nikkei wrote: »

eg
...
Hope this helps
Nikkei

Jolly nice of you to go to all that trouble in writing it out!

Nikkei

Anytime ChattyChappy - I'm very chatty too if you hadn't already guessed :-)

Moggles_2

If your relative doesn't always pay off their balance each month, they were already forking out quite a bit of interest unnecessarily.

If this latest interest rate hike spurs them to tackle that, MBNA has done them a favour, IMO.

marksoton

vbrindle wrote: »

marksoton You are not very helpful so why bother replying. My "friend" is actually a relative of mine. The T & C have changed since they took the card out. In fact they seem to change the T & C every 5 mins. The fact still stands that if you make the minimum payment you do not expect the balance to have gone up the following month.

What,because i am stating facts you don't agree with ? :rolleyes:

You asked for views not help. I would say you have received both.

oki25

your interest varies due to the amount of days in month, so will fluctuate, will even out over a few months, so use a wider sample, say go back 1 year, will have come down £60, if NO spends on card.....

moneysavingmarrow

I see where you are coming from.

You see the estimated interest, at £110, is more than the october payment.

In reality, if the interest in november does end up being £110, then the minimum payment requested will be £115, which will knock another fiver off of the balance.

It aint no good complaining about high interest rates after probably enjoying a 16 month period of 0% and not making any provision to shift or pay off the debt before the rate is jacked up!

Just think that 0% for 16 months and 35% for 8 months would probably be less overall than the average cost of a two year loan from a highstreet bank and get on and deal with the debt before the two years are up.

Of course, your relative has every right to set up a standing order of say £150 per month to the mbna card account, which will always mean the minimum payment is well over done and there is no reason that additional payments cannot be made as well.