Advice sought: paying £650.00 (!) per month in min payments on 2 x MBNA cards...help!

originalmiscellany

BigCraigJohn wrote: »

At the end of the day charging 30% apr on such large balances is scandalous. I had a Cap 1 that went from 14.9 to 35.9 with a £10k balance. There was just no way on earth I was ever not going to default it.
Ive read of people writing to creditors and asking them to lower the rates, otherwise defaulting might not be such a bad thing as atleast the balances are frozen and you can have a go. I think that as you sense you are not going to be able to/or not want to keep this up for what is going to be forever.
Its exactly what these greedy creditors want, and these are the sort of threads those high and mighty moral people need to read, and see that it is very often the creditors greed and stupidity hiking rates etc that causes issues.

Sure you wont be getting more credit for a while but if you can make say £400 a month towards the balances they will rapidly drop and you'll feel better seeing the balances go down than you will feel bad for having the defaults.

It's high BCJ, but it's life. If people sign up and can't control their spending there'll always be a market for people with v. high premiums, such as in this case. It's a case of business as usual really, and whilst it is very high, our OP signed up, at his own risk, so we can only hope he won't do it again, and try to educate people to read the small print and to think of the price of the entire loan, rather than just the initial 12 month 0% APR or whatever the deal is.

Superbiatch

I can't see anywhere it says if you live on your own or not? If so £450 is a HUGE food budget and could be halved at least.

Is the extra income from properties you own? And service charges for those properties also? Should this not be included in the rent you are charging - if thats the case? All assumptions as thats the only reason I could see mortgage and service charge repayments so high, yet income of almost £6k not from your main job.

originalmiscellany

I wonder if his additional income is attached to a house, and mortgage, then going bankrupt could mess this up too? Again we just need more info from the OP.

barbarawright

To give proper advice, we really need to understand your financial situation. A mortgage of almost £3000? :eek: Is this on several buy-to-let properties?

Just had a look, and this does seem to be the case

https://forums.moneysavingexpert.com/discussion/2231551

Billy-no-Money

originalmiscellany wrote: »

It's high BCJ, but it's life. If people sign up and can't control their spending there'll always be a market for people with v. high premiums, such as in this case. It's a case of business as usual really, and whilst it is very high, our OP signed up, at his own risk, so we can only hope he won't do it again, and try to educate people to read the small print and to think of the price of the entire loan, rather than just the initial 12 month 0% APR or whatever the deal is.

Sure, MBNA are quite entitled to increase the interest rate to whatever they like - but they cynically exploit human nature to maximise their profits:

1. Tempt people in with a 0% transfer, and a 'typical' 16% APR or thereabouts
2. Set the minimum payment at interest + £5
3. Watch the borrower build up their debt because the minimum payment is so low
4. Swoop in and double the interest rate - instantly throwing the borrower into crisis because almost the entire payment is interest

Being an idiot I left my MBNA balance ticking along on minimum payments because there were other debts at the same APR but higher minimum payments, so I focused on reducing those. MBNA then doubled interest rates presumably because I was seen as a high risk!!

Thankfully because I'd been paying down other debts I had somewhere to go and could close my MBNA account down (which I guess is what they wanted) - but many people are in much deeper crisis than I was, the behaviour of MBNA helps nobody but them.

I got myself into trouble through my own stupidity, but my debt history followed a pattern that is encouraged and exploited by some credit card companies.

villarenter30

Only a few weeks ago i posted on the credit cards forum re mbna as i had a 9k bak no job and my parents were offering to pay £100PER WEEK off it - I rang MBNA and asked for them to review balance and they refused however said if I kept these payments up after 3 months they would definately review and guess what after 3 mths they said they wouldn't - they were very sorry I was given incorrect info and they would flag as a training issue - replies on credit card boards were unsympathetic saying I was asking for ppi and not paid for it - No I was asking for one percent off and they would have repayment fully of their debt - I have seen some posts were people are advised to ignore or not admit debts and hope after 6 years they get statute barred - I was not asking or trying to do this -I was offering to pay the whole thing back and so was shocked at some peoples stance - I hope you get somewhere with MBNA as I found them frustratingly difficult - they didn't want to know - and basically wanted to frighten u by stating your credit file would be shot etc if u defaulted or went on a payment plan - they just play on you wanting to keep your credit rating - when I spoke to the manager and i use that term loosely - she offered to pay the funds back that i had paid into my bank account but said obviously your interest rate will remain the same and the debt increase again - they would rather do that than decrease the rate by 1%!!! Hope u get somewhere - they are total crooks

[Deleted User]

My SOA

Monthly Incomings:

My salary (net) £1,500.00 Any way to increase? Overtime? Second job?
Partners salary £0.00
Benefits £0.00
Additional income £5715.00 Again, Any way to increase?
Total £7215.00

Monthly Outgoings:

Mortgage/Rent £2939.68 Any way to reduce, even temporarily? Extend the mortgage (you can always overpay or re-reduce the term again once debt free?)
Service charges £340.00
Council Tax £100 Can you claim singla occupancy discount? (25% discount) Are you paying over the usual 10 months - can you ask to spread over 12?
Gas £40 check comparison sites (eg Uswitch) every 6 months or so to ensure that you are on the cheapest tariff for your area (check roughly every 6 months) - if switching is cheaper, check cashback sites (Quidco, onepoll, topcashback etc)
Electric £45.00 as above
TV License £10.99 (12.37)
Food £450.00 Very high - how many does this need to feed? Try dropping brands, batch cooking, meal planning, go to the cheaper supermarkets (Aldi/Lidl) - Visit the old style board for cheap recpie ideas, and advice on reducing this.

Debts - are these all the minimum payments?
MBNA 1 £233.04
MBNA 2 £412.82
Northern Rock £104.00
Capital 1 £280.00
HSBC Gold £75.55
Lloyds 1 £71.56
NatWest Gold £68.24
Halifax £49.12
Tesco £52.00
NatWest M/card £42.29
Lloyds Advance £35.00
Total: £5349.29

Net +/- pcm: + £1866.00 surplus per month for debt extinguishing
I suspect that this is not the case, and you don't actually have this amount at the end of every month - there seems to be a hugh number of things left off your SOA - internet, mobile phone, house phone, (do you have pay-for-tv?), entertainment, clothes, (do you have a car?, and if so all associated costs - insurance, tax, petrol), home insurance, any other transport/travel costs etc - you need to have a look at your bank account and see where all your money actually goes - keep a spending diary if necessary, noting down ALL monthly spends from a carton of milk to the mortgage and everything in between.

Debts - I have prioritised these in the order that you should be making over-payments. Once you can acurately calculate your SOA's monthly surplus (£1866 above doesn't seem acurate to me. Then pay this towards the first debt on the list (HSBC Gold) ensuring that you pay the minimum towards all other debts, once this debt is gone move on to the next expensive debt (MBNA (both) - again, continue to pay the minimum towards all other debts and pay your SOA's surplus towards this debt (+previous HSBC gold minimum payment - £75.55, until both MBNA cards are gone. Once these are paid off in full continue to use this "snowballing" method all the way down the list until all your debts are gone)
HSBC Gold Total Debt £2,946.03 APR 30% - £75.55
MBNA 1 Total Debt £12,311.44 APR 29.95% - £233.04
MBNA 2 Total Debt £19,539.99 APR 29.95% - £412.82
Tesco Total Debt £2,153.14 APR 18.5% - £52.00
Halifax Total Debt £2,525.26 APR 17.95% - £49.12
NatWest Gold Total Debt £2,974.99 APR 16% - £68.24
NatWest M/card Total Debt £1,890.83 APR 16% - £42.29
Lloyds 1 Total Debt £3,633.60 APR 14.49% - £71.56
Capital 1 Total Debt £9,000.00 APR 9.9% - £280.00
Northern Rock Total Debt £9,066.75 APR 9% - £104.00
Lloyds Advance Total Debt £1,250.00 APR 0% for 6 mths, then 27% - £35.00

Total Debt: - £67,292.03

Hi,

You are in the very fortunate position of having a good income to pay towards your debts - I expect that even when you have a full SOA drawn up that you will still have/be in a position to create a healthy surplus at the end of every month.

I have made some comments on the SOA you have provided above - hopefully some of them will be of use to you. The main thing to note is that your SOA needs to be acurate, once you have worked this out, you will be in a position to find areas that cutbacks can be made so as you have a surplus at the end of every month in which to overpay your debts with.

Another point to note is that you need to stop spending on the cards.

And finally, if your credit report is good, perhapse you will be able to transfer some of the debt that you curently have to low life of balance cards, or 0% interest cards.

HTH

D9

teddyclown

I just wanted to say that I completely sympathise with your situation. I, too, am trapped by MBNA - paying £300 per month:eek:. I have phoned them a couple of times asking if they would consider reducting the interest rate, all to no avail. They just don't want to know.

This is my first post, although I have been reading the forum for a long while. The mention of MBNA just struck rather a nasty chord with me!

All the best,

Teddyclown

On_A_Financial_Death_Bed

Firstly, many thanks indeed to all those who have been kind enough to provide very generous advice, post comments, view, et al. – I am so greatly appreciative of everyone’s contributions!

Just to touch upon my “SOA” (below) and fears that this may not be accurate - to be fair, it is pretty accurate, I feel, though I appreciate the concerns that it mightn’t be and thank you for raising these concerns; basically, I don’t own a mobile, nor a landline, I don’t have broadband at home, I don’t have any car costs as I don’t drive and my transport costs are effectively my season ticket Tube loan which is deducted at source from my salary. Additionally, I don’t have insurance on anything beyond that provided for in my service charges (I have four mortgaged flats, you see). I pretty much live the life of a hermit, too, in the sense that I don’t go out (so, no entertainment costs; TV will make do for me), I don’t drink or smoke, and I have enough clothes, so, again, I don’t pay out for that either. As such, whilst not perfect, the SOA is quite accurate.

To those who wondered where my surplus income comes from, then a few people have rightly guessed that this comes from the surplus I make above and beyond my four mortgages in terms of my rental income per month. So, for some people (and quite logically) this may prompt the question: with a spare £1866.00 over per month, why the worry?

Well, the situation is not quite as it may appear, for varying reasons.

Firstly, the spectre of rate rises is cause for some concern:

I have been paying daily attention to financial news sources in respect of the MPC; the hawks vs doves; the inflation pressures on rates currently; swaps markets and their estimations of rise projections; and other predictions for potential base rate fluctuations. On the back of these predictions – and taking the most dovish point of view myself – then I have made calculations of my projected rental profit between now and Dec 2013, i.e. approximately 2.5 years hence.

On the surface of it, things look quite good as, even with modest rate rises* (* which, though, do see me lose approximately £400.00 per month per 25 basis point rise), I stand to make £45,196.37 over that period. HOWEVER, this doesn’t tell the whole picture.

At the moment, my monthly rental profit is disguising a real monthly shortfall, i.e. with a salary of £1500.00, but with £2409.61 of monthly bills, then I’d actually make a shortfall of £909.61 were it not for my rental profit. Not losing sight of such a shortfall and factoring in the fact that, as I say, with every 0.25% rise in the BoE base rate I would lose approximately £400.00 of any monthly profit surplus, then in real terms – i.e. considering the prospect of ever-diminishing monthly rental profit and also reaching the point where, ultimately, I would begin to make a monthly rental loss if and when rates hit 2%), then the real net surplus I would end up making between now and Dec 2013 is: £9.981.21. And therein lies a massive problem -- £9,981.21 will make a difference in terms of reducing my debt levels, but not as substantial a difference as it might have done.

Hence, my need to somehow reduce my 2 x MBNA minimum payments (which amount to around £650.00 per month combined, but don’t allow me to pay debt off – this is just the worst kind of treading water).

Secondly, there is another problem, which only serves to ratchet up the pressure on me: I owe my father £50k, and it’s due to be repayed in 3 years’ time. This is not in my name, but his, though this is beside the point: I am duty-bound to pay it off, and I want to, much more to the point. The problem is, though, that my father's house is secured against this £50k loan he gave me some years ago, and his house is my parents’ only source of money in their old age above the state pension, which for them is meagre and currently is only being used to pay interest on a Spanish property... and that market is even more dire than the UK’s. Both my folks are in the seventies, too, with my father almost dying last year with multiple organ failure. It is, as you may imagine, a difficult predicament.

If anyone, given the above (and re-posting my SOA again below) has any further suggestions then I’d be ever so grateful.

One final point worth mentioning perhaps: an ex-girlfriend of mine, who I remain very close with and who earns an enviable, low six-figure salary has offered to apply to various credit cards so that she could ultimately balance-transfer (on a 0% deal for 18 months or on a very good life-of-the-balance deal) some of my debt to her new card(s). She is not linked to me in any way in terms of credit referencing, etc. Is this is a good thing to try? I appreciate that the credit limit she might get, were she successful with her application(s), might not be massive but it would be something. I’ve helped her out in the past financially, too, and, what’s more, in spite of my massive debts, in the last 3-4 years I have made every monthly payment on time to all my various creditors, so I would most certainly do so again with any debt of mine in her name. But any advice on this would be gratefully received.

Again, many thanks to everyone who’s been kind enough to read this – I do appreciate this.

MY SOA

MONTHLY INCOME:

MY SALARY (NET) £1,500.00
PARTNERS SALARY £0.00
BENEFITS £0.00
ADDITIONAL INCOME £5715.00
TOTAL £7215.00

MONTHLY OUTGOINGS:

MORTGAGE/RENT £2939.68
SERVICE CHARGES £340.00
COUNCIL TAX £100
GAS £40
ELECTRIC £45.00
TV LICENSE £10.99
FOOD £450.00
MBNA 1 £233.04
MBNA 2 £412.82
NORTHERN ROCK £104.00
CAPITAL 1 £280.00
HSBC GOLD £75.55
LLOYDS 1 £71.56
NATWEST GOLD £68.24
HALIFAX £49.12
TESCO £52.00
NATWEST M/CARD £42.29
LLOYDS ADVANCE £35.00
TOTAL: £5349.29

NET +/- PCM: + £1866.00 SURPLUS PER MONTH FOR DEBT EXTINGUISHING

MBNA 1 TOTAL DEBT £12,311.44 APR 29.95%
MBNA 2 TOTAL DEBT £19,539.99 APR 29.95%
NORTHERN ROCK TOTAL DEBT £9,066.75 APR 9%
CAPITAL 1 TOTAL DEBT £9,000.00 APR 9.9%
HSBC GOLD TOTAL DEBT £2,946.03 APR 30%
LLOYDS 1 TOTAL DEBT £3,633.60 APR 14.49%
NATWEST GOLD TOTAL DEBT £2,974.99 APR 16%
HALIFAX TOTAL DEBT £2,525.26 APR 17.95%
TESCO TOTAL DEBT £2,153.14 APR 18.5%
NATWEST M/CARD TOTAL DEBT £1,890.83 APR 16%
LLOYDS ADVANCE TOTAL DEBT £1,250.00 APR 0% FOR 6 MTHS, THEN 27%

TOTAL DEBT (IN MY NAME): - £67,292.03

RAS

On_A_Financial_Death_Bed wrote: »

MONTHLY INCOME:

MY SALARY (NET) £1,500.00
PARTNERS SALARY £0.00
BENEFITS £0.00
ADDITIONAL INCOME £5715.00
TOTAL £7215.00

MONTHLY OUTGOINGS:

MORTGAGE/RENT £2939.68
SERVICE CHARGES £340.00
COUNCIL TAX £100
GAS £40 - for how many people
ELECTRIC £45.00 - for how many people?
TV LICENSE £10.99
FOOD £450.00 = how many are you feeding?

These are debts not Monthly outgoings

MBNA 1 £233.04
MBNA 2 £412.82
NORTHERN ROCK £104.00
CAPITAL 1 £280.00
HSBC GOLD £75.55
LLOYDS 1 £71.56
NATWEST GOLD £68.24
HALIFAX £49.12
TESCO £52.00
NATWEST M/CARD £42.29
LLOYDS ADVANCE £35.00
TOTAL: £5349.29

NET +/- PCM: + £1866.00 SURPLUS PER MONTH FOR DEBT EXTINGUISHING

MBNA 1 TOTAL DEBT £12,311.44 APR 29.95%
MBNA 2 TOTAL DEBT £19,539.99 APR 29.95%
NORTHERN ROCK TOTAL DEBT £9,066.75 APR 9%
CAPITAL 1 TOTAL DEBT £9,000.00 APR 9.9%
HSBC GOLD TOTAL DEBT £2,946.03 APR 30%
LLOYDS 1 TOTAL DEBT £3,633.60 APR 14.49%
NATWEST GOLD TOTAL DEBT £2,974.99 APR 16%
HALIFAX TOTAL DEBT £2,525.26 APR 17.95%
TESCO TOTAL DEBT £2,153.14 APR 18.5%
NATWEST M/CARD TOTAL DEBT £1,890.83 APR 16%
LLOYDS ADVANCE TOTAL DEBT £1,250.00 APR 0% FOR 6 MTHS, THEN 27%

TOTAL DEBT (IN MY NAME): - £67,292.03

Please provide details of the maximum limits for all the cards.