Credit Limit Reduction... Closed my account

chattychappy

adeyb wrote: »

My credit limit was £15,000. A silly limit, I appreciate,

It's not really. I've had sillier limits than that with MBNA. Suited them, suited me.

Voyager2002 wrote: »

surely an accountant would be concerned about the cost of interest and seek to repay the amount outstanding rather than seeking to borrow more.

Nah.. costs, benefits, returns on investment, risks etc. Can all make sense to an accountant. 20% APR (or whatever) might sound expensive - but if you use the credit to train as an accountant (for example!) then the return can make it worthwhile.

Never understood the stuff I sometimes hear about how proud people are that they have never paid a penny of interest. This is fine if they've never had an opportunity to make a return on the finance available to them.

YorkshireBoy wrote: »

It will be...very soon...because once they update your credit file with the new information you'll be using almost 100% of the credit you have available to you, ie you're maxed out and any new lender you approach will score you as desperate.

If they've only just cut it, ie this month, then best to get an application in for a BT card quicksticks! (which begs the question why are you carrying such a large revolving balance...unless its a 0% promotional offer?)

This is excellent advice.

In the end, try to keep more than one CC going to avoid dependence on one line of credit. Don't take this stuff personally. It is my view that providers are still in a bit of a mess when it comes to assessing credit worthiness of people and the requirement to demonstrate regulatory compliance can force them into weird decisions. Add a dash of IT blunder and nothing surprises me.

Rupert_Bear

adeyb wrote: »

I asked this question. The answer? I made sizeable payment of the debt last year and they wanted to know how I made it. I explained where the money came from (I perfer not to discuss that here). Since then I have basically returned to the original balance (again, the reasons why are not relevant).

@Snowtiger
I'm not quering my financial capacity and don't think that's ever been mentioned. I'm questioning the way a credit card company can cut a persons credit in such a way it leaves them without any.

I have an MBNA card and often use for the promotional offers. I only pay the min by dd each month and then when the promo offer is nearly up I then send them payment to clear the debt.

I have never had to explain to them where the money has come from to pay off the balance and yet you say MBNA wanted to know where your large amount came from. With me I am talking about £10k.

Whole thing just does not add up.

chattychappy

Rupert_Bear wrote: »

I only pay the min by dd each month

I think it's worth sending an extra quid just to avoid the minimum payment marker. (Not extra work for me as I pay manually anyway, not sure if you can arrange something like that by DD.)

Paul_Herring

chattychappy wrote: »

I think it's worth sending an extra quid just to avoid the minimum payment marker. (Not extra work for me as I pay manually anyway, not sure if you can arrange something like that by DD.)

Some companies will allow it.

Some are even known to allow you to pay the whole balance off every month by DD...

Rupert_Bear

chattychappy wrote: »

I think it's worth sending an extra quid just to avoid the minimum payment marker. (Not extra work for me as I pay manually anyway, not sure if you can arrange something like that by DD.)

Good point. With Barclaycard I set the the amount £1.00 above the min required. However have not noticed by only paying the min each month with MBNA affecting my ability to get further credit. I stress this on a promo rate. MBNA only have two options the min amount or full amount by DD.

I applied to Lloyds for a £16,500 loan and was agreed instantly on a rate of 7.7%.

chattychappy

Rupert_Bear wrote: »

Good point. With Barclaycard I set the the amount £1.00 above the min required. However have not noticed by only paying the min each month with MBNA affecting my ability to get further credit. I stress this on a promo rate. MBNA only have two options the min amount or full amount by DD.

I suspect the value of this flag is doubtful (a bit like the cash advance flag). Whilst traditionally both might indicate stress, this is probably not the case if you are on a promotion, or in the case of Santander Zero getting cash overseas to avoid forex loadings (as I do).

They do also record if you are on a promotion, so hopefully they ignore a "minimum" flag, if you also have a "promotion" flag.

thenudeone

adeyb wrote: »

They have basically closed my account and removed my credit facitily. This seems totally unfair and after speaking to my boss, he said he had heard it happen to others.

Is there anything I can do about this?

Yes it certainly does happen to others.
https://forums.moneysavingexpert.com/discussion/2762290

You can complain to mbna but I wouldn't hold your breath. They didn't budge for me.

You can complain to the Ombudsman but as you haven't lost any money they are likely to say that they don't want to interfere with the bank's commercial decision making process. (this is exactly what they said to me at the first stage)

This is of course a huge cop-out by a government funded body which is meant to prevent unscrupulous behaviour by financial institutions. In any other business relationship, the apparent right of a company to effectively terminate a contract without notice (i.e. effectively prevent any further use of a facility) would almost certainly be a breach of The Unfair Terms in Consumer Contracts Regulations 1999 [in fact it's listed as a clause likely to be unfair in schedule 2 – 1 (g)].
Also, I suggest that their action “causes a significant imbalance in the parties' rights and obligations” and could therefore be classed as “unfair” under section 5 – (1).

But - you will have to fight very hard to get anywhere with it.

chattychappy

thenudeone wrote: »

In any other business relationship, the apparent right of a company to effectively terminate a contract without notice (i.e. effectively prevent any further use of a facility) would almost certainly be a breach of The Unfair Terms in Consumer Contracts Regulations 1999 [in fact it's listed as a clause likely to be unfair in schedule 2 – 1 (g)]./QUOTE]

I disagree with your interpretation.

5.—(1) A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer....(5) Schedule 2 to these Regulations contains an indicative and non-exhaustive list of the terms which may be regarded as unfair.

Schedule 2 - 1(g)enabling the seller or supplier to terminate a contract of indeterminate duration without reasonable notice except where there are serious grounds for doing so;

"indicative", not "likely" as you have it.

The contract is not terminated without reasonable notice. The facility for future borrowing is removed without notice, but the contract continues to run whilst the consumer continues to pay down according to the existing terms.

There may well be issues of fairness, but I don't think it arises from UTCCR 1999. Also it has more to do with the performance of terms rather than the terms themselves.

thenudeone

Hi chattyhappy

I think you have missed the fact that thee provision of a credit card facility is an ongoing service which is separate from the treatment of the balance outstanding at any point.

I think it's easier to see what's fair by comparing what would be fair in another circumstance.

eg: You have a contract with Telco for the provision of telephone services, which are provided on credit. The contract has no fixed end date. Telephone services are a normal and routine part of everyday life (some would say essential). You pay 14 days after the billing period. Telco's contract says that it can decide to stop your telephone service at any time for no reason at all and without warning. If it does so, you will still have the normal time to pay for the balance and charges already accrued.
Would that contract be likely to breach UTCCR 1999? In my view - Yes [see Schedule 2 - 1(g)]

Now replace "Telco" with "BankCo" and "telephone service" with "credit card service" and tell me why you come up with a different answer.

chattychappy

No still disagree.

It is the term itself that has to be unfair (not how the CC interprets it). CC's reserve the right to vary the credit limit. This seems very fair. (g), which as I say is only indicative, states "terminate a contract of indeterminate duration without reasonable notice except where there are serious grounds" (my emphasis).

If cardholders have notice, then clearly there would be a chance for people to quickly spend up to the limit. Besides, it is not the contract that is being terminated (without notice). Just future borrowing. This is what makes it a fair term IMHO. Credit is still being continued on existing borrowing. It probably would be unfair if CCs could demand instant closure of the account and immediate repayment. Incidentally, the cardholder can terminate without notice (if they repay) so it's hardly unbalanced.

You might think that a CCs decision is unfair. But UTCCR governs terms of contracts, not their implementation.

Finally, UTCCR1999 doesn't apply to terms that are necessary in compliance of other statutes or regulations. Banks are required to lend responsibly so they can argue that a term that allows them to stop future borrowing is in compliance of that.