Change in Credit Card Laws

babalooty

I owe circa £8000 on a credit card. I have not used the card for anything for almost a year and my regular payments have been affordable at around £182. These come out of my bank account via Direct Debit. This month my payment was £320!! - when I enquired Santander said they had changed the way my interest payments were cancelled and regular payments were now going to be around this figure.

Why? - I asked, "Oh, we just changed the way we are calculating your payments"

Why? - I asked, "Oh, we just changed the way we are calculating your payments"

Why? - I asked, "Oh, we just changed the way we are calculating your payments"

But WHY? - I said again. They are claiming that this is due to a law brought in by the Government. - my internet research reveals nothing about this.

How can they do this? When I took out the card I signed an agreement with them. They are changing the goalposts, my monthly payments have almost doubled yet I have not borrowed any more money. I am not changing the goal posts and saying to them I am only going to pay you back £6000.

I will not be able to pay this payment next month.

Has anyone else experienced this and what did they do?

A friend has suggested I call them and say I cannot pay and agree some payment plan - but will this get reported by them and subsequently affect my credit rating?

I have tried to apply for a 0% card to perform a balance transfer but so far all have said "No".

Can anyone help or suggest a way forward?

Thanks so much.

YorkshireBoy

babalooty wrote: »

When I took out the card I signed an agreement with them.

That same agreement you signed said they could make changes to the agreement with notice. You have the right to cancel your account and take your business elsewhere. The fact that you can't do so yet isn't their problem.

....but will this get reported by them and subsequently affect my credit rating?

Yes, it'll be marked as an 'arrangement to pay' and will affect your credit rating in a bad way.

I have tried to apply for a 0% card to perform a balance transfer but so far all have said "No".

Can anyone help or suggest a way forward?

Why are they "all" saying no? Have you checked your credit report to see what they're seeing when they search you?

izools

The government guidelines have just called into play a more mature / financially sensible minimum payment to ensure customers only making minimum repayments aren't left with the debt for decades.

Ergo Santander have issued their customers a notice of variations on statements issued in the last few months explaining that minimum repayments will increase to 5% of the outstanding balance.

If you can't afford this you'll need to enter into a reduced payment plan with them after making less than the minimum payment one month. This will unfortunately have an adverse effect on your credit rating.

It is still unknown whether customers should be legally eligible to opt out of the change in minimum payment in the same way we can opt out of interest rate hikes.

babalooty

Thanks so much for taking the time to respond. This has helped me understand.

chattychappy

izools wrote: »

It is still unknown whether customers should be legally eligible to opt out of the change in minimum payment in the same way we can opt out of interest rate hikes.

I think they can, but I haven't heard of it being tested yet.

From the lending code:
134. If terms and conditions are changed to the customer’s detriment customers should be given at least 30 days personal notice (for example, by letter, e-mail, etc) before the change takes effect. At any time during the 60 days from the date of the notification, the customer must be free to close or switch their account without having to give notice. Customers should also be free to close or switch accounts without any financial penalty.

Now this assumes that the lender has incorporated the Code into the T+Cs, but most have.

I think the OP should argue it, in writing if necessary, quoting the above. One would hope that any reports to CRA could be reversed but it could all be a bit of a battle.

CiderBoy

Babalooty - have you actually got a notice of variation from Santander? If so then have alook at it to see how it states the minimum payment will be calculated.

With my Paypal credit card I received the notice with my November statement which stated that the minimum payment would change to interest charged + any fees/charges + 1% of balance rather than the 5%.

This is confirmed on the back of the first page of my statement yet the minimum payment has been calculated at 5% (more than double what it should be).

It took a bit of arguing with them but they've agreed that I only need to pay the correct minimum payment.

izools

chattychappy wrote: »

I think they can, but I haven't heard of it being tested yet.

From the lending code:
134. If terms and conditions are changed to the customer’s detriment customers should be given at least 30 days personal notice (for example, by letter, e-mail, etc) before the change takes effect. At any time during the 60 days from the date of the notification, the customer must be free to close or switch their account without having to give notice. Customers should also be free to close or switch accounts without any financial penalty.

Now this assumes that the lender has incorporated the Code into the T+Cs, but most have.

I think the OP should argue it, in writing if necessary, quoting the above. One would hope that any reports to CRA could be reversed but it could all be a bit of a battle.

Indeed it could be a bit of a battle, mostly because it's Santander...

One potential problem could be the creditor replying with a statement along the lines of

"We feel we are not varying the terms in a way that could detriment the customer. Quite the opposite, by increasing your minimum repayment we are ensuring that your debt is repaid within a more reasonable time frame, costing the customer less when compared with the previous minimum repayments.

Our stance is that the old terms detriment the customer more than the current terms ergo the new terms stand"...

Or something

chattychappy

izools wrote: »

Or something

I'd go for "something" or even "nothing". What you wrote is just too clever for them!

YorkshireBoy

izools wrote: »

"We feel we are not varying the terms in a way that could detriment the customer. Quite the opposite, by increasing your minimum repayment we are ensuring that your debt is repaid within a more reasonable time frame, costing the customer less when compared with the previous minimum repayments.

Our stance is that the old terms detriment the customer more than the current terms ergo the new terms stand"...

Which would be countered by the customer playing the 'reasonable' and 'sympathetic' card, ie how is it reasonable to double a customer's minimum payment without first ascertaining whether they can afford it...with the only get-out being an 'arrangement to pay' marker on their credit file?

izools

Certainly one that is open to a plethora of interpretation and conjecture... No doubt it will be played out at great length over on the CAG website soon enough

chattychappy

Actually it seems obvious to me that it's detrimental in the circumstances of the OP. He must now pay more than he did before. Previously he could have paid more if he wanted to. So he is more restricted, choice has been taken away. The result is he could pay the minimum before, but can't pay now without hardship, if at all. The T+Cs have been changed to the point where he cannot comply. The contract is personal between the CC company and the OP - so this is all that is relevant, rather than wider considerations.

But this provision is different from the interest hike para (par 81). Tbat gives the right of a cardholder to keep the account open on the old rate and pay "within a reasonable time" (usually they let you pay it off in the normal way). This only gives you 60 days from their date of notice. This probably needs "cleaning up" in the next revision. It would be particularly unfair (and unsustainable in my view whether or not the code is reviewed) if you'd paid a BT fee up front on the basis of a small minimum repayment, only to find that it got increased.