Is 34.9% grounds for complaint?

AndreaE

Virgin have increased my interest rate to 34.9%.

Do I have the right to object (to them and then the Financial Ombudsmen) on the grounds of it being simply unreasonable?

They have given me notice and have not increased my rate more often than they are allowed but this rate seems excessive.

Is it worth me writing to complain or do I not really have a leg to stand on?

The monthly minimum payment is now huge and I am barely covering the interest with the payment each month and am not eating away at the debt at all. I can't do a balance transfer as I don't have space on a better card and cannot get a new one so am stuck with Virgin.

Many thanks.

PS I can only pay the minimum each month but have not missed any payments.

digitalphase

Unfortunately there's nothing you can do as APR is variable normally, which means they can change it whenever they want (and give you prior notice which they have done).

You can usually do a deal with them to keep it the same APR, pay off the balance and then close it. If you want to continue using the card you will have to accept their new rate I'm afraid :rolleyes:

michaelvintner

I am affraid, from what I have heard Virgin are famous for doing this. I don't see how you have ground for a complaint. They would have written it in their terms and condition and the apr is variable after all.

They did the same to my brother after his 0% rate expired and he told them to get stuffed and did a balance transfer.

What some card companies have done recently is offer the chance to repay at the old interest rate but close the account, so basically you still repay the debt but can no longer spend on the account. See if Virgin will do this. It's a shame you cannot do a balance transfer as this would be my option. What cards have you applied for?

By all means write a letter of complaint but I don't think it will do anything apart from make you feel a bit better.

Daisy_Duck

Don't panic As has already been mentioned, you do have the right to have the account held at your previous rate. If you do this the account will be suspended for further spending and will be closed when you've paid the balance off.

AndreaE

Thank you all.

I had hoped that the rate would be deemed unreasonable and could be challenged on that basis.

I have other cards that are full and have applied for more recently that have been declined so moving the debt elsewhere isn't an option.

As the card is full, it is unuseable anyway so having it suspended would not be a problem but as I can only afford the minimum payment each month and that only just covers the interest added each month I am not actually paying anything off the card at all which is soul destroying but I can't see that they would enter into an agreement to halt the increase in interest when they can see from their records that the debt will never be repaid at the rate I am going.

michaelvintner

AndreaE wrote: »

Thank you all.

I had hoped that the rate would be deemed unreasonable and could be challenged on that basis.

I have other cards that are full and have applied for more recently that have been declined so moving the debt elsewhere isn't an option.

As the card is full, it is unuseable anyway so having it suspended would not be a problem but as I can only afford the minimum payment each month and that only just covers the interest added each month I am not actually paying anything off the card at all which is soul destroying but I can't see that they would enter into an agreement to halt the increase in interest when they can see from their records that the debt will never be repaid at the rate I am going.

Please see this link in regards to them closing the account and letting you repay at the old rate. I know it doesn't look very good at the moment but it is going to look a bit better paying it at your old interest rate that at 34.9% (Which by the way I think is ridiculous).

http://www.loansandborrowing.co.uk/new-laws-fairer-deal-for-credit-card-borrowers.html

foogirl1983

I've recently had one of these letters taking my APR from 16.9% to 29.9%. Luckily I have no balance on the card and simply closed it.

I remember there being a paragraph in the letter stating that if you didn't accept the increase then to telephone them. They would then leave the rate at its current level but the card would be unusable.

If you can only just manage your debt repayments then I would seriously consider doing this, paying off your card and closing the account.

AndreaE

My previous rate was 29.9% - still excessive compared to their advertised typical rate of 16.6%.

Last month the interest charged was £343.91 and the minimum payment due this month is £348.91 so there is no way I will ever clear the debt.

It would take me 239 years.

binaryuniverse

I'd close that before it goes up. You're clearly can't afford to spend more or have any interest rises.
It's worth your time going on to the debt free wannabe board and posting an SOA on there.

nomoneytoday

AndreaE wrote: »

My previous rate was 29.9% - still excessive compared to their advertised typical rate of 16.6%.

Last month the interest charged was £343.91 and the minimum payment due this month is £348.91 so there is no way I will ever clear the debt.

Sorry, but the increased risks with such payments is the reason they have raised the rate. The best bet IMHO is to either to lock down the lower rate and close the card, or transfer it to a cheaper provider.

AndreaE

I just telephoned the Financial Ombudsman and they are writing to Virgin on my behalf.

I was asked my objective and I said it was to pay less each month but at a reduced rate so that at least some of the payment was going towards repaying the debt rather than just paying them £4k interest a year on a debt that will never reduce.

Virgin will be given 8 weeks to come to an arrangement with me and if they don't, I will need to make an official complaint with the Ombusdsman.