Change to Co-op T & Cs

Paulgonnabedebtfree

I have always regarded Co-op bank as one of the more ethical lenders but am starting to question this after having a skim through the alterations to their T & Cs.

On the subject ot what we call "ratejacking", they announce that you have 60 days to reject a rate rise and will no longer be able to use the card. No problem so far. However, it also says that if you don't pay off the full amount within 6 months, you wiil have been assumed to have accepted the rate rise. Though I don't doubt that they are allowed to do this, it does seem to go against the spirit of the anti ratejacking stuff. For instance, if I have a largish debt with them and they increase the interest rate but I'm unable to pay more than the minimum payments, they will have effectively forced the increase onto me. In fact, if I felt that I would be unable to repay the full amount within the 6 months, I wouldn't contest the increase in the first place.
I do realise that the timescales in the agreement with the credit card industry were non-specific, but I do feel that this flies in the face of the principles behind fighting the ratejacking.
I've not heard of other companies doing this though, if Co-op are doing it, I imagine others are too.
Although not binding, my understanding is that companies qwould generally be fine about minimum repayments being made in such a scenario until the debt is cleared.

[Deleted User]

Could you post the exact wording?

Paulgonnabedebtfree

Deleted_User wrote: »

Could you post the exact wording?

Only just seen this response. It's a typical long winded piece of writing.

"Where a change in interest rate is to your disadvantage, unless your interest rate tracks another rate, we will give you 30 days' prior notice of the change and you may, within a period of 60 days, notify us that you wish to close it without paying the extra interest. In this case you will need to repay any outstanding balance within a period of six months. Where you use your account or do not repay any outstanding balance within six months you will be taken to have accepted the change in rate and the new rate will apply to you."

This is a piece of paperwork that is specifically about one of my credit cards with them so I don't get the bit about "...unless your interest rate tracks another rate........".

Also, it refers to using the account after rejecting the rate rise - something which I thought doesn't happen anyway. No problem with that but a problem with the 6 month limit to repay immediately following that.
I may well phone them in the next few days for clarification. It just doesn't sound like Co-operative Bank's style so I wonder if I may have misunderstood something.

[Deleted User]

It does look odd. It reads that if you don't clear your balance, the rate will then take effect regardless. I haven't seen another card specify this. They may WANT you to pay back quickly, but don't normally specify it.

The using your account bit - I think that means if a CPA goes through on your account (eg your AA breakdown renewal), which can happen on closed accounts, you will be deemed to be using the account, so the rate kicks in. Again, unusual.

I don't get the 'unless your interest rate tracks another rate' bit either. It sounds as if there's a rate in existnece which tracks another - let's say the base rate for sake of argument, although that would be bonkers, and I know we're not talking mortgages here - so if your rate goes up because the base rate goes up, you can't opt out of that because that's the deal you're on.

shieldfab

I recall the Clydesdale had a card some years ago linked to your mortgage rate. The card was very low rate but could vary in line with mortgage changes. Could this be the issue referred to? If a change was linked to a known changeable rate then the option to not pay the changed rate would not apply?

Paulgonnabedebtfree

shieldfab wrote: »

I recall the Clydesdale had a card some years ago linked to your mortgage rate. The card was very low rate but could vary in line with mortgage changes. Could this be the issue referred to? If a change was linked to a known changeable rate then the option to not pay the changed rate would not apply?

No. My mortgage is totally separate from any other credit cards/loans etc.

Hax

I thought that the idea was that you could reject the rise in interest rate, but were expected to pay back the money within a reasonable time. Maybe the Co-op have just decided to put a more solid figure on what they consider to be "reasonable".

Paulgonnabedebtfree

Hax wrote: »

I thought that the idea was that you could reject the rise in interest rate, but were expected to pay back the money within a reasonable time. Maybe the Co-op have just decided to put a more solid figure on what they consider to be "reasonable".

It would appear that way but in doing so they have, for many people, made a nonsense of having the right to refuse an interest rate increase.

izools

I am pretty darn confident that anyone affected by this six month clause would have a complaint upheld by the OFT / FOS.

Six months is clearly not a "Reasonable Timeframe" to quote coming from a bank that offers unsecured lending products of terms up to 72 months.

"Reasonable" would be a product of affordability. Someone on a 15K salary paying #100.00 a month toward a #2,000.00 debt would take maybe 22-26 months to clear depending on the APR and that certainly is not unreasonable for the level of debt and income. For example.

That clause won't stick.