Minimum Payment has shot up!!!

oscar52

Deleted_User wrote: »

Not as far as I know. MBNA is the only provider who's implemented the new min pay requirements onto their existing customers.

Don't think requirement is the right word.

MBNA had the crappiest repayment scheme in the world at £5 plus any interest or charges, or I suppose on the flip side the best repayment if you were stoozing or offsetting.

This "new" payment scheme is slightly better, but as stated only if you are not struggling. I know of some people who saw their min payment jump by circa £200 a month - not easy to find when it is such a big jump.

thenudeone

chattychappy wrote: »

I agree, I think it's legally dubious. However I think this is a fight that consumer organisations don't want to get into and I haven't heard of any individuals challenging it.

But I wouldn't see it as a "charge". In most cases it is a simple requirement to pay back more of what you owe each month.

How many people have written on these forums "I'm paying the minimum repayment but because of the interest my balance is hardly going down. Aren't the banks scammers!"

So, after a campaign by consumers organisations, a bank changes its repayments (not the interest rate or charging structure, just the period of repayments) so that every month more of the balance is repaid, less interest is charged over the life of the lending, and the bank makes LESS PROFIT.

Now customers complain - "the banks are scum. I can't afford my new higher minimum repayment!"

They can't win.

jonjamie1970

thenudeone wrote: »

How many people have written on these forums "I'm paying the minimum repayment but because of the interest my balance is hardly going down. Aren't the banks scammers!"

So, after a campaign by consumers organisations, a bank changes its repayments (not the interest rate or charging structure, just the period of repayments) so that every month more of the balance is repaid, less interest is charged over the life of the lending, and the bank makes LESS PROFIT.

Now customers complain - "the banks are scum. I can't afford my new higher minimum repayment!"

They can't win.

Its a good point, people are blaming everyone else instead of looking at their own house first.

Sunshine_required

Sorry to hijack this thread, sorry i'm not sure about your rights or if you can dispute the minimum payment but i've just opened an account with MBNA and balance transfered £1700 with 0% interest for 18 months. Can anyone tell me roughly what my minimum payment will be?
TIA! x

tara747

Sunshine_required wrote: »

Sorry to hijack this thread, sorry i'm not sure about your rights or if you can dispute the minimum payment but i've just opened an account with MBNA and balance transfered £1700 with 0% interest for 18 months. Can anyone tell me roughly what my minimum payment will be?
TIA! x

Perhaps try establishing your own minimum e.g. £100 a month to get the £1,700 paid off before the 0% period ends?

Sunshine_required

tara747 wrote: »

Perhaps try establishing your own minimum e.g. £100 a month to get the £1,700 paid off before the 0% period ends?

This is the plan but until end July I am not in a position to be paying £100 per month... more like £50, then from Aug onwards I will increase my payments to ensure debt is paid before 0% ends. I'm just unsure if the new MBNA increased minimum payments will require me to pay more than £50...

tara747

Sunshine_required wrote: »

This is the plan but until end July I am not in a position to be paying £100 per month... more like £50, then from Aug onwards I will increase my payments to ensure debt is paid before 0% ends. I'm just unsure if the new MBNA increased minimum payments will require me to pay more than £50...

Good for you. Maybe give them a ring to put your mind at rest. HTH.

bengal-stripe

Sunshine_required wrote: »

......i've just opened an account with MBNA and balance transfered £1700 with 0% interest for 18 months. Can anyone tell me roughly what my minimum payment will be?

Minimum payment will be 1% of the outstanding balance (in your case £17.00) plus interest due (in your case: nil). That might be upped to a minimum payment of £25.00 (not sure about that).

But make sure you pay that without fail and on time. Otherwise the bank will probably withdraw that 0% nterest deal. You can put all your excess payments into a savings account, as long as you pay the lot before the 0% interest deal expires. (Hope you asked about the exact date and marked it big in next year's calendar.)

chattychappy

thenudeone wrote: »

How many people have written on these forums "I'm paying the minimum repayment but because of the interest my balance is hardly going down. Aren't the banks scammers!"

They may well have written that, but I think they are wrong to say that.

thenudeone wrote: »

So, after a campaign by consumers organisations, a bank changes its repayments (not the interest rate or charging structure, just the period of repayments) so that every month more of the balance is repaid

Well, "consumers organisations" take it upon themselves to represent people who take the view above.

BUT NOTE, it was agreed that the change would only apply to new accounts. Specifically it was decided against applying this requirement retrospectively for the very good reason of not tipping people into distress.

I believe it is unfair to apply this change to old borrowings. In general I am happy with the change going forward.

For people tight on finance, this doesn't really help. For example, it could force them into paying more against a low rate on MBNA rather than higher rates elsewhere. Every case is different. In my case, what was a very long term excellent LOB deal (in return for an upfront fee) has now been curtailed.

thenudeone wrote: »

and the bank makes LESS PROFIT

In the case of long term LOB deals, this will work in their favour. For irresponsible borrowers, yep - they'll pay off more. But this will free up more limit so they max out again. MBNA can simply turnover their capital faster.

It was a commercial decision - not in response to regulation. NO WAY did they do it thinking they would make LESS PROFIT!

michaelvintner

chattychappy wrote: »

They may well have written that, but I think they are wrong to say that.




Well, "consumers organisations" take it upon themselves to represent people who take the view above.

BUT NOTE, it was agreed that the change would only apply to new accounts. Specifically it was decided against applying this requirement retrospectively for the very good reason of not tipping people into distress.

I believe it is unfair to apply this change to old borrowings. In general I am happy with the change going forward.

For people tight on finance, this doesn't really help. For example, it could force them into paying more against a low rate on MBNA rather than higher rates elsewhere. Every case is different. In my case, what was a very long term excellent LOB deal (in return for an upfront deal) has now been curtailed.




In the case of long term LOB deals, this will work in their favour. For irresponsible borrowers, yep - they'll pay off more. But this will free up more limit so they max out again. MBNA can simply turnover their capital faster.

It was a commercial decision - not in response to regulation. NO WAY did they do it thinking they would make LESS PROFIT!

Finally a useful reply. Thank you.