Is Increasing your monthly payments 'fair'?

Flicker1uk

I'd value some opinions on this please as Virgin have me a little bit fuming at the moment.
Some background first. I am finance literate (well like to think so) having worked in finance for 15years and holding relatively senior positions especially in decision making and risk.
I regularly change my CC to take advantage of 0% deals and use them as a way of repaying o/s debts (i'm aware not the purpose of a card) but a good way of reducing debt quickly.
I recently left my last job and am currently between roles.

I hold a Virgin CC acct through MBNA. They recently wrote to me to explain the minimum payment was changing from 2.5% of balance to 1% of balance plus interest.

In common with a lot of people, I didn't really pay that much attention to the note and carried on paying the minimum payt.
Following a conversation with an agent over the interest charging period and fluctuations in the payment, she mentioned that my next payment due would be closer to £100 per month rather than the £50/ month it currently is.
When I asked, she quoted the change in policy, when I pressed further she said this was so the cost of credit would be reduced for people as the capital would be paid back quicker.

Everybody with me so far??

This is all well and good as people's cost of credit will be lower overall. But when I enquired about what if there was difficulty making the higher payment, she said I could speak to their arrangements team to make and arrangement but this would affect my credit rating.

So here is my point (thank god I'm sure some of you are saying).
If a policy change increases the monthly payments on an account which makes the account unaffordable and the company is willing to come to an arrangement but it will affect your credit rating, is this fair?

Fruit_and_Nut_Case

Flicker1uk wrote: »

I am finance literate

Flicker1uk wrote: »

I didn't really pay that much attention to the note

These two points don't really seem to fit together.

And I think that it's actually the government making the CC providers change their minimum payment calculations.

chattychappy

Fruit_and_Nut_Case wrote: »

These two points don't really seem to fit together.

Ha ha ha... but bizarrely they often do. People forget their day job when they get home and ignore all the advice they've been giving to others. A lawyer friend told me he can never bring himself to read T+Cs because he doesn't like doing unpaid work...

Fruit_and_Nut_Case wrote: »

And I think that it's actually the government making the CC providers change their minimum payment calculations.

The change in rules only applied to new accounts. As far as I remember, it was specifically decided not to impose the change on existing accounts precisely because of the hardship it could cause.

I'm sympathetic to the OP's point - but it has been discussed a number of times before. My guess is it might not survive a properly mounted challenge, but I doubt whether any consumer body would take it on because of the fashionable view that it can only be a good thing if people are forced to pay down their debts faster - regardless of the effect on individuals.

Other threads on this:
https://forums.moneysavingexpert.com/discussion/3121684
https://forums.moneysavingexpert.com/discussion/3078372
https://forums.moneysavingexpert.com/discussion/3077964
https://forums.moneysavingexpert.com/discussion/3072002
https://forums.moneysavingexpert.com/discussion/3073642
https://forums.moneysavingexpert.com/discussion/3067956
https://forums.moneysavingexpert.com/discussion/3062638
https://forums.moneysavingexpert.com/discussion/3044966
https://forums.moneysavingexpert.com/discussion/3052700
https://forums.moneysavingexpert.com/discussion/3048604
https://forums.moneysavingexpert.com/discussion/3067956

Flicker1uk

Fruit_and_Nut_Case wrote: »

These two points don't really seem to fit together.

And I think that it's actually the government making the CC providers change their minimum payment calculations.

Yes they do, it means I understand what is said, I just don't always pay attention in class!!

Flicker1uk

chattychappy wrote: »

Ha ha ha... but bizarrely they often do. People forget their day job when they get home and ignore all the advice they've been giving to others. A lawyer friend told me he can never bring himself to read T+Cs because he doesn't like doing unpaid work...



The change in rules only applied to new accounts. As far as I remember, it was specifically decided not to impose the change on existing accounts precisely because of the hardship it could cause.

I'm sympathetic to the OP's point - but it has been discussed a number of times before. My guess is it might not survive a properly mounted challenge, but I doubt whether any consumer body would take it on because of the fashionable view that it can only be a good thing if people are forced to pay down their debts faster - regardless of the effect on individuals.




Interesting as I would class as an existing account

chattychappy

Flicker1uk wrote: »

Interesting as I would class as an existing account

Yes precisely. MBNA are under no regulatory obligation to make this change. It is just a commercial decision they have made.

davec1960

Flicker1uk wrote: »

I regularly change my CC to take advantage of 0% deals and use them as a way of repaying o/s debts

I hold a Virgin CC acct through MBNA. They recently wrote to me to explain the minimum payment was changing from 2.5% of balance to 1% of balance plus interest.

As it is a 0% deal and hence interest will be £0.00 then your payment will be 1% of balance so why are you concerned it will increase?