Interest Rate Variation Terms Unfair????

user56565

Hi

American Express have recently sent me a notice of variation, increasing my interest rate from 18.9% to 25.9%.

This was triggered by a failed direct debit last month. The direct debit failed because Barclaycard took £5,000 out of my account and took 2 weeks giving it back to me. Hence there was no money to cover the direct debit. The funny thing was that Amex received the minimum amount due by the due date, because I made other arrangements to make this payment. Does this justify an increase of 7% in my rate??

I wrote a letter to their office complaining, with all the above info. Their reply: tough. They are saying that I had missed earlier payments within the last 12 months (when I changed jobs), and are relying on the following terms:

We may change any of the standard rates of interest at our discretion.

We may vary any of these Terms and Conditions for any valid reason. We will notify you of any variation in writing.....

These terms are present in almost all credit card contracts, but I never imagined they would be used so callously.

I know many people are having their interest rates increased like this, and I wondered, aren't the above terms unfair under the "Unfair Terms in Consumer Contracts Regulations 1999"??

These terms basically give banks the opportunity to put rates up to anything they like, and I'm pretty sure this could be challenged. I would welcome any feedback especially from experts in contract law.

please see the following OFT publication regarding the UTCC Regs, in particular page 13 regarding penalties and variation clauses: http://www.oft.gov.uk/NR/rdonlyres/720A136C-9435-40C4-8549-7BDFCCF85B70/0/oft143.pdf

tom188

Im afraid this is happening quite a lot now as banks try and find new ways to make money in the light of the cap on missed payments etc being set at £12 by the OFT,

They will use the argument you are a greater risk after missing payments to justify your rise. Several cards of mine have recently increased their aprs by 5%, I have a clean credit history, and this I think will continue over the coming months as banks try and recoup their losses.

Robert_Sterling

If you read the terms and conditions and then applied for the card you have accepted the conditions. Get a better better card as soon as possible and close down the offending card.

tom188

From your link

Finally, and most importantly, any right to vary
may be fair if the consumers can exit from the
contract before being affected – but obviously
adequate advance notice of the variation must
be given and the consumer must not suffer
any loss or significant inconvenience by
cancelling.

I dont think you can claim for any loss because you are borrowing money off them in the first place.

The bank will allow you to cancel the card if you dont like the new terms and conditions. By continuing to hold it you are accepting them.

immoral_angeluk

I had exactly the same thing with my capital one card. they wanted to up my interest from an already horrendous 29.9 to 34.9 'to meet current market conditions'!!! They gave me the option to keep the current interest rate but I could not use my card and would have to pay off the balance and close the account as soon as possible... or if I wanted to keep the account open and carry on using it I had to accept the new interest rate.

Needless to say it was Bye bye capital one :hello:

user56565

Finally, and most importantly, any right to vary
may be fair if the consumers can exit from the
contract before being affected – but obviously
adequate advance notice of the variation must
be given and the consumer must not suffer
any loss or significant inconvenience by
cancelling.

To exit a credit card agreeement, I would have assumed that the credit card company would need repaying in full. This would be difficult for those in debt because they would need to borrow the money from somewhere else, and you cannot be guaranteed that another company will lend you the money.

So for the term to stand, I should be able to have the agreement cancelled, and Amex should close the account providing:
> The old rate applies
>Repayments allowed on a minimum repayment basis whereby extra can be paid as and when (the usual repayment basis)
>No marks on my credit card file suggesting that this is some arrangement to pay (where it may look bad on my credit file)

Do you guys think this is a reasonable request?

I'd like to thank you all for your help so far.