MBNA Minimum Payment and Interest Changes - Help

Clive_India

Hi

Like many people I've just recieved a letter about the minimum payment rise for MBNA cards. At the moment I'm on a ridiculous 27/28% interest rate, and have a bill of around £9,000, so yes the minimum payments are going to be through the roof, don't ask how I got there I'll be here for years trying to explain that one. Now currently I'm unemployed, so I can't threaten to change the provider of my card, so I'm stuck with them... curses!. But the money I am recieving at the moment (£260 a month (JSA)) is going to pay my card off (about £240 a month depending on the wind). Thankfully at the moment I'm living with the folks and they are kind to me and understand my situation, so I'm not paying out any other debts, either in rent, food, or bills including mobile phone (Pay as you Go, very low user, not even £1 a month user) etc, until I can get a job. So I can afford to pay about £240 a month to MBNA, keeping about £20 a month for the sake of travelling to the Job Centre and Job Interviews etc.

But with this new minimum payment rise, I won't be able to pay them at all with my interest rate being as it is, but using their example on the leaflet they enclosed with the letter, if I had an APR of 16.9% and a balance of £5,000, the minimum payment would be about £115 a month, now I have £9,000 with 27% this would take it up to around £300+ a month. But using their example if my interest rate was changed back to 16.9% my minimum payment would be around or less than £230 a month (using basic x2 maths). Now I realise I have an obligation to pay off debts, but I can't afford this hike, and there does seem to be offers of debt management, but this I believe would affect credit history etc for around 6 years, I don't won't this to be affected.

So do you think that MBNA would be agreeable to those terms, if I offered to keep paying at the same minimum payment amount but at a reduced interest rate, after all I've had a card with them for nearly 10 years and the amount of interest I've paid them I could have paid off the balance twice over.

iceage3

cant your parents help you

suburbanwifey

I think his parents are helping him enough, giving him a free home and free food...do you expect parents to bail everyone out?

His parents are good and he's handling his situation well from what I can see.

iceage3

at least thats free!!!!!!!

good advice

BUT LIKE MANY WHEN YOU BEEN ON THE DOLE FOR MORE THAN 6 MTHS WHAT ARE YOU GOING TO DO ,THE JOBCENTRE WONT UNDERSTAND YOUR DEBTS?

chattychappy

I think the most you can do is a quick written complaint insisting that they continue the minimum on the same basis. Then escalate to the FOS.

I think that this situation is ridiculous - but as far as I know, there has been no successful challenge.

Doubt if they'll change the interest rate - unless they want to avoid a referral to the FOS and this is the easiest way of reaching a compromise.

kev.s

if you can't afford to pay your balance off in full every month, then you're clearly living outwith your means, even prior to jobloss.
it's the same old post time and time again... "i've spent to much, can't afford it" etc etc, when will people learn?

chattychappy

kev.s wrote: »

if you can't afford to pay your balance off in full every month, then you're clearly living outwith your means, even prior to jobloss.
it's the same old post time and time again... "i've spent to much, can't afford it" etc etc, when will people learn?

I think this is beside the point. People's circumstances change. They might win the lottery or inherit - or in the OP's case get a job. The point is that it shouldn't be moving goal posts that cause people to default.

vbrindle

Kev, I guess I am one of those people who was stupid in the past and racked up debts.

All it takes is an unexpected expense then you put it on the plastic then the month after something else crops up.

If people could afford to pay the credit card in full every month why would anyone need a credit card in the first place.

Anyway this isn't the issue. The issue now is things have changed. People's circumstances have changed. People lose jobs or get pay freezes while everything else is going up. Petrol, food, fuel bills. Also at the same time Banks are increasing interest rates on overdrafts and on credit cards and now MBNA have caused a huge jump in minimum payments. If they made gradual increases it wouldn't have been bad and I know it's the right thing to do but it's a shock to the system if you're not prepared for it.

People's purses are being stretched from all angles at the moment and for many people it's tipping them over the edge.

So in reality your post isn't very constructive Kev and if you're bored of these topics why do you keep reading them?

Clive_India

@iceage3 - My parents can't help out, plus I know the job centre won't help out, chocolate fireguards them lot, plus my debts got nothing to do with them.

@chattychappy - Do you think that if I tell them, that if they don't change the interest rate then I won't be able to pay, in anyway shape or form, as I don't have any assets to even pay off two months minimum payment, so it would probably be bankcruptcy.

@kev.s - If things were normal I would be able to pay off my balance in full, but when you don't have a job and you've gone what I've gone through (something I wish to keep private), then things aren't normal. Believe me if I had a job, I'd be well within my means of living

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But do you think that I could sucessfully argue a case, if as I eluded to in this post, that if they couldn't agree to reducing the interest in order to make sure I'd fit within the minimum payment I can afford, then the only alternative is bankcruptcy as I do not have any assests like a house, car or anything worth more that the clothes on my back to in anyway settle payment.

izools

If you can't afford to pay what they ask, tell them, and come to a reduced payment plan with them.

It's not rocket science.

Little_bit_dizzy

I believe that you can also choose to reject the interest rate rise, but by doing this effectivley it closes your account (so you can't spend on the card again).

The card provider is obligated to then maintain your existing rate until the balance is cleared. Perhaps your personal circumstances change to a point whereupon you may be able to switch to a 0% / low interest balance transfer card?

I know Martin has spoken about rejecting rate increases in the past, so there will be information about it somewhere on the site, if I find it I'll post the link for you.

http://www.moneysavingexpert.com/reclaim/credit-card-interest-rate-increases

Good luck with the job hunting. Hope things pick up.