Complicated "Interest Opt-Out" question

izools

So it goes something like this -

Mother has a Barclaycard Platinum. £4,000 balance.

She closed the account seven years ago shortly after which she placed the account into an AP. She has been paying £50 a month for the last seven years interest free (and still now only got it down to £4,000... still bless her for keeping at it).

She now wishes to take the account out of an AP and leave it closed. Barclaycard are happy to leave the account closed (in fact won't re-open it full stop, unsuprisingly).

However, they wish to increase the APR to around 24.9%.

The account was closed as a "Barclaycard Platinum" at 13.9% APR. The account has not been re-opened or used since. No payments have been missed since it was opened in 1995.

Can they do this to the APR? Surely as the account is closed any APR increases have been "Opted Out" of?

jonesMUFCforever

Sorry but what is an AP?

izools

Arrangement to Pay - Barclaycard agreed to stop interest on the account and set a £50 / Month fixed payment. This has been in place for seven years.

It is not a default or arrears or missed payments - simply an informal arrangement with the card company. The account still shows as a live credit card being paid up to date on time on her credit file, but with an "Arrangement to Pay" Special Instruction, preventing her to shift other card balances to a 0% offer. She wants to take her Barclaycard out of an AP with a view to getting a 0% deal (or low interest loan) for all of her CC debt in six months time or so

(Although having said that, Sygma have given her a 0% deal on some other CC debt despite the AP marker. I doubt the big boys like MBNA, Halifax, or Egg would, though)

cifpower

Is the card marked as "AP" on her credit file? If so, this is as bad as a default and will make getting credit difficult.

izools

cifpower wrote: »

Is the card marked as "AP" on her credit file? If so, this is as bad as a default and will make getting credit difficult.

Yeah I know it's a negative. It's not as bad as a default and she's been approved for two 0% offers from Sygma despite the Barclaycard being marked as in AP on her files.

But that's besides the point. The question is whether Barclaycard can increase the APR from what it was when the account first went into AP - 13.9% in 2003 before the AP started, take a/c out of AP, and account all of a sudden goes up to 24.9% despite having been closed all along.

Do able?

izools

any takers?

Tixy

I don't know the answer. But it doesn't seem to be very fair. I would imagine you would need to write to argue the case against it perhaps suggesting that this isn't in the spirit of the set of principles the card providers agreed to (now a code of practice) - maybe you could use the 'No increase for those with debt problems' section (4th green box on this link) - http://www.moneysavingexpert.com/reclaim/credit-card-interest-rate-increases

If you look at their own guidelines http://www.choosingandusing.com/resources/documents/CreditCardFactsheet.pdf

Can any customer be repriced in this way?
Your credit card company will not increase your
rate, where:
• You have failed to make the minimum monthly
payment for two months or more;

• You have already agreed a repayment place

I would think its worth trying at least to negotiate with them

izools

Thanks Tixy, I'll get this sorted out.

This is good news for mother, I'll linky her

Regarding those that think an AP is as bad as a default, it certainly isn't. It is the "least negative" of all the negative pieces of information - it shows that you are paying, on time, at an amount that the creditor is happy to accept.

My mother has had no trouble passing meagre credit checks like utilities, phones, and even two Sygma credit cards this year with the long-standing AP marker on her file but given her increased income from lodgers she is keen to do what is required so that she can get a long-standing 0% deal form the likes of Egg, MBNA, or the Co-Operative. Failing that, a low-interest loan from the bank.

An MBNA underwriter in fact told her in March that the only reason they declined her was because of the AP marker on her Barclaycard and if she paid the standard amount for six months it would be worth re-applying to them. The account doesn't show late or missed payments - it shows payments have been made on time - but in line with an informal, and agreed, arrangement. No great shakes for all but the strictest creditors

Thanks for everyone's input

BugsyBrowne

izools wrote: »

Thanks Tixy, I'll get this sorted out.

This is good news for mother, I'll linky her

Regarding those that think an AP is as bad as a default, it certainly isn't. It is the "least negative" of all the negative pieces of information - it shows that you are paying, on time, at an amount that the creditor is happy to accept.

My mother has had no trouble passing meagre credit checks like utilities, phones, and even two Sygma credit cards this year with the long-standing AP marker on her file but given her increased income from lodgers she is keen to do what is required so that she can get a long-standing 0% deal form the likes of Egg, MBNA, or the Co-Operative. Failing that, a low-interest loan from the bank.

An MBNA underwriter in fact told her in March that the only reason they declined her was because of the AP marker on her Barclaycard and if she paid the standard amount for six months it would be worth re-applying to them. The account doesn't show late or missed payments - it shows payments have been made on time - but in line with an informal, and agreed, arrangement. No great shakes for all but the strictest creditors

Thanks for everyone's input

Don't matter if it is default or arrangement to pay,they are both as bad as each other,any of them 2 show up on your credit report don't care what any one says it means your a bad customer..

izools

star-fire wrote: »

Don't matter if it is default or arrangement to pay,they are both as bad as each other,any of them 2 show up on your credit report don't care what any one says it means your a bad customer..

Really? Then why in the last three years, with this AP marker on mother's credit file, has she been approved for four prime credit cards, two mobile phone contracts, british gas utility, and BT, without so much as a whisper or a referral?

If it is as bad as a default notice, why do both Experian and Equifax show the account as paid up to date on time every time?

Of course they both show up on your credit file. That's the whole point of having a credit file. You're more than welcome to believe that an AP is as bad as a default, but you'll be believing a fallacy rather than taking on board the reality of a situation -

Which is that negative markers on credit files carry different weights - A default is worse than arrears, arrears are worse than late payments, and late payments are worse than agreed arrangements. That's just how it works.

As regard to being a bad customer what in fact happened was that Barclaycard kept increasing mother's limit - she kept asking them to reduce her limit, they refused. She kept asking them to close the account - they refused and continued re-issuing new cards.

She at one point had a nearly £10,000 limit whilst on benefits despite asking that they close the account and reduce the limit.

As a result, and to be honest mostly my fault as a child, the card was used when it shouldn't have been.

Being a good customer mother agreed to pay back the debt, explain the situation to Barclaycard, who agreed that it would be unfair to charge interest on such a high balance to a single mother on benefits.

Continuing to be a good customer she has agreed to take the account out of an arrangement and start paying interest again in light of a now better income.

My only goal is that Barclaycard portion her APR in a way that is kept in line with the dictates and guidelines of the codes of conduct that they are governed by.

BugsyBrowne

I understand your mother has been good paying back the money,i just thought arrangement to pay and default were basically the same either way the customer could not keep up the repayments.