MSE News: Co-op 'breaking spirit' of anti rate-jacking credit card rules

drussellh

fewfe fef fedfdsfv dsfds

davidgmmafan

"Credit cards are taken on with variable interest rates. You know that the charge can be altered. You are being given a whole six months to substantially eat/clear your balance. What alternative is being demanded"

Erm the status quo? If you reject the rate rise provided you stop using the card you pay it off at the rate to which you agreed. I would also like to mention in passing that, to the best of my knowledge, the FOS have not investigated any cases of rates being increased as whenever they get such a complaint the company declines to give the reasons for the decision and backs down.

"Some think that credit cards are not a long term solution to debts.

So if you have a debt on a card, it's perfectly reasonable to expect that debt to be repaid, if not on a monthly basis, it should certainly be repaid within 6 months."

Frankly I'm getting a little of this holier than thou approach from people who say, with a smugh look on thier face I imagine, I pay my credit card off in full each month. That's grand, just like the people who have NEVER incurred a bank charge. I just wish such people would understand that they don't make money for the banks. Quite the reverse in fact. The banks need and love the people you mock for leaving a balance in a credit card.

I think it is therefore a bit much for a bank to want to move the goalposts after a rate has been agreed. Its variable, I get that. They can choose to increase the rate (s) if they so wish, and the customer can choose to accept it and continue using the card, or not.

BTW I'm not sure how the post from Paul-Herring is intended, I've just quoted part of it because it sums up what a lot of the smug holier than thou brigade sound like an awful lot.

By all means enjoy the perks, and the thrill of beating the system, but don't foll yourselves into beliving it is free. Its just that you aren't paying for it...

ianfabris

Good Customer service !! I dumped my Co-op VISA card when I discovered that the interest I had been charged each month, on a card whose balance I cleared every month was NOT a mistake.

Apparently the Co-operative bank pays transactions off before transfers. So I was paying interest on the £85 transfered from my previous credit card for 'convenience' and the funds I was paying were clearing transactions occuring after the date of the statement I was paying off.

I only discovered this when I complained that my balance had been paid off twice because I had adjusted a payment date and despite being told categorically I would not. This was the second time this had happened, so I wasn't happy anyway.

The interest amounted to pennies, but I objected to the so called 'ethical bank' using such 'unethical' banking practices.

Paul_Herring

ianfabris wrote: »

The interest amounted to pennies, but I objected to the so called 'ethical bank' using such 'unethical' banking practices.

As previously pointed out, "ethical" describes the ethos behind how the Co-op intend to distribute their investments, and in no way is intended to describe how they treat their customers.

izools

ianfabris wrote: »

Good Customer service !! I dumped my Co-op VISA card when I discovered that the interest I had been charged each month, on a card whose balance I cleared every month was NOT a mistake.

Apparently the Co-operative bank pays transactions off before transfers. So I was paying interest on the £85 transfered from my previous credit card for 'convenience' and the funds I was paying were clearing transactions occuring after the date of the statement I was paying off.

I only discovered this when I complained that my balance had been paid off twice because I had adjusted a payment date and despite being told categorically I would not. This was the second time this had happened, so I wasn't happy anyway.

The interest amounted to pennies, but I objected to the so called 'ethical bank' using such 'unethical' banking practices.

So you hadn't paid the full statement balance each month then, just what you'd spent in the preceding month?

ianfabris

As far as I was concerned I set up a direct debit to clear the balance each month ... that was what I asked for and if that was not what was setup, then its yet another reason to be unimpressed with the service i received from Co-operative Banks Visa Card division.

Effectively I had cleared my balance every month for 18 months, I queried it on a regular basis and got apologies and refunds of the 20p monthly interest on a number of occasions. There was nothing on my records to suggest this was the reason, it was only because I was passed to a supervisor to sort out the repercussions of the double debit that I was informed that this was 'standard Visa Card policy'.

Anyway, I've never had the problem with any other credit card, so why should this be a reflection on the way I manage my money. Just for the record ... I bank with the Co-operative Bank, their internet banking is a bit user unfriendly but generally my treatment has been good ... my rant is directed solely at the Credit Card division.

nomoneytoday

So how long is "reasonable" to pay off a credit card?
6 months? 44 years?

Paul_Herring

nomoneytoday wrote: »

So how long is "reasonable" to pay off a credit card?
6 months? 44 years?

As long as is actually reasonable. i.e. somewhere in between.

If the co-op are (I don't know, but using as an example) handing out limits that are, say, on the order of a year's salary, and the card is being used up to that limit, is it reasonable to expect it to be paid off in 6 months? No (from the customer's POV.)

44 years? Again no (but from the company's POV.)

Of course, if the co-op are actually handing out limits such that 6 months is an unreasonable time to expect it to be paid back, then the co-op are really being a tad naughty.

shadeel

I'm worried about the co-op putting up the interest rate sometime in the future, I couldn't afford a higher one. Should I complain about the change in T & C now or wait until the co-op try to increase the rate, and then try to close the account and complain?

izools

I would suggest that if you are subject to rate jacking, and close the account, to write to co-op stating that you feel the term is against the spirit of the government initiative.

I would use the following argument:

"The government initiative surrounding raising interest rates and opting out of said increases permits the creditor to expect the debt to be repaid in a reasonable time.

First let us clarify that the credit agreement between us has a minimum repayment of 2.5% of the balance each month. This is a term you have decided upon, and on that basis, I believe it fair to assume that any payment made to the account in excess of the minimum amount you decided upon would be view as repaying the debt within a reasonable time frame.

If you are not happy with a repayment of say, 3% of the balance each month, and you consider this to be unreasonable, I would invite you to please explain why you allow customers to pay less than this in the terms of you credit agreement. I would be interested to see an explanation that doesn't contradict your expectation for balances to be cleared within six months.

I put it to you that if you feel six months is a reasonable timeframe to repay a debt, the minimum payment each month should reflect this.

I further put it to you that the minimum repayment you set out in your agreement is in contradiction with the reasonable timeframe you set out for accounts that are closed due to rate increases. These terms are, when looked at along side each other, frustrated.

I therefore suggest you allow more time to repay the debt.

If you are not happy with this suggestion please advise your reasons in a full and final response post haste to enable my referring this matter to the FOS"

See what they make of that :beer: