Credit card shake-up begins with MBNA payment overhaul News Discussion

Milarky

As Capital One has just given 60 days notice in writing of this change (November 19) - under the PSR requirement the other banks should have to declare their positions in similar notices no later than 1 November, no?

nickmack

What I wouldn't be suprised to see is the APR's increased for different interest types to make them the same. So if you had Purchases at 19.9% and Cash Advances at 24.9%, the Purchases are increased to 24.9% and this removes any advantage gained from reversing the allocation of payments.

chattychappy

nickmack wrote: »

What I wouldn't be suprised to see is the APR's increased for different interest types to make them the same. So if you had Purchases at 19.9% and Cash Advances at 24.9%, the Purchases are increased to 24.9% and this removes any advantage gained from reversing the allocation of payments.

Yes, my guess is they will differentiate by changing the up-front fee on "deals", as they already do to some extent. MBNA recently quoted me a 5% fee for a transfer to a current account.

Consumerist

nickmack wrote: »

What I wouldn't be suprised to see is the APR's increased for different interest types to make them the same. So if you had Purchases at 19.9% and Cash Advances at 24.9%, the Purchases are increased to 24.9% and this removes any advantage gained from reversing the allocation of payments.

It would, at least, simplify credit cards to have the same rate for everything as it used to be when the banks were perceived to be more honest and trustworthy.

Plappers

I've been caught out by Barclaycard as I opened a card with them taking advantage of their long term low interest rate which seemed a great deal (thanks MSE!) I was later sent an offer from Barclaycard for an interest free balance transfer to the same card for 6 months, but ignored it at the time. Later I happened to transfer an additional balance onto the card, and was surprised to see in the statement it had been added as interest free, and at the time though this was great. I've since spotted that since then my payments have been just coming off the interest free balance, not the original low interest balance. Although I am on a winner not having to pay interest on that 2nd balance, Barclaycard have been quite clever as they have insured the amount I am paying interest will stay the same whilst that interest free amount exists. Hopefully from 31/12 this will change, but I bet I won't get any more interest free offers after that date!

Consumerist

Plappers wrote: »

. . . Hopefully from 31/12 this will change, but I bet I won't get any more interest free offers after that date!

Whilst I can't speak for Barclaycard, I can say that MBNA, who have already switched their order of payments, are still offering 0%-transfers and 0%-on-purchases deals.

bobbydrake50

Plappers wrote: »

I've been caught out by Barclaycard as I opened a card with them taking advantage of their long term low interest rate which seemed a great deal (thanks MSE!) I was later sent an offer from Barclaycard for an interest free balance transfer to the same card for 6 months, but ignored it at the time. Later I happened to transfer an additional balance onto the card, and was surprised to see in the statement it had been added as interest free, and at the time though this was great. I've since spotted that since then my payments have been just coming off the interest free balance, not the original low interest balance. Although I am on a winner not having to pay interest on that 2nd balance, Barclaycard have been quite clever as they have insured the amount I am paying interest will stay the same whilst that interest free amount exists. Hopefully from 31/12 this will change, but I bet I won't get any more interest free offers after that date!

You should have had a letter from Barclaycard by now - I had one several weeks ago that the order of payments is changing from 26th November (I presume the same for everyone on the same date).

Percy1983

Can anybody confirm that halifax is still 20th November, I will admit that its only a small amount stuck behind a balance transfer costing me 50p a month interest, but if delaying payment another days clears this then i will wait.

thenudeone

MSE_Archna wrote: »

This is the discussion thread for the following MSE News Story:

"Credit card shake-up begins with MBNA payment overhaul..."

It is possible for an MBNA cardholder (inlcuding Virgin and play.com) to be WORSE OFF under their new rules.

This problem applies if your balance includes some at 0% promotional rates, but made up of different types (eg: purchases vs cash) and / or different end dates.
eg: £1000 0% BT til Sep 2011; £1000 0% purchases til May 2011.

Previously in these circumstances payments would be applied to the offer that had the earliest end date, so paying off £1000 in May 2011 would clear the May ending offer, leaving £1000 outstanding on the September ending 0% BT offer.

Under the new rules, payments would be applied to the offer that WOULD have the highest standard interest rate. The standard rate on BT is higher than purchases, so paying off £1000 in May 2011 would clear the September ending offer, leaving the May ending offer balance still outstanding and now accruing interest.

The only way round this is to wait until 1 day after the end of the May offer, then pay off £1000. That payment would clear the May offer balance first, because the current rate being charged on that balance (18.9% ??) is higher that the September offer balance at 0%. A few days interest charge is better than 4 months!

Even mbna staff are confused by this change and one has already given me incorrect information (although to be fair, they have now agreed to manually implement the "incorrect" payment method that I was given by their staff, so that I do not lose out).

So if you have a mixture of 0% offers, you should carefully check which order they will be paid off in, and do not use any new offers unless you have checked that you don't fall into their trap.

If you will be worse off due to the change, it may be worth challenging this. Not sure how far you would get if you attempted to statutorily refuse (as explained elsewhere) to accept what is effectively an increase in interest rates, and pay off thE balance under the previous terms.

bluedove

Now this is a bit confusing, i have £600 outstanding on 0% BT which ends in june 2011.
I have been offered 0% for purchases untill august 2011 for all purchases of £250 an above completed before january 31st 2011.

See my post here i presume that if i spend £250 on the card before jan 31st, my monthly payment will be used to clear BT first before the purchases.