Rate gone from 17.5% to 23.9%

markoone

Hi, never posted before so sorry if I do things wrong....

I have recently faced a little financial hardship and I currently have a maxxed out credit card (£3K) with Natwest, I was paying it at £150 per month, Direct debit so I can pay it off quicker, I arranged this over the phone with them, but the recent problems have caused me to have to reduce that to minimum payment. I know over the last few months, the interest on the card was approx £57, and I have consulted people who have credit cards at a similar rate of 17.5%, and they are paying around £67 for this, based on minimum payment. I decided to cancel my direct debit of £150 and make a direct payment to the actual credit card account of £70, with a view to increasing my payments as circumstances improved. I then got letters from Natwest telling me that I had to make the minimum payment of £150 and I was being charged £12.50 for late payment and it was imperative that I paid £150 as I was now in arrears. I phoned the credit card company and explained my circumstances to them, and this was - I thought - accepted, and they cancelled the £12.50 fee and accepted that I was continuing payment at £70 per month by direct means. I asked the operative if it was OK to pay direct, this meaning paying into the account through sort code and account number of the credit card account using my credit card refernce so they can track it to me. she said this was ok, and I thought this was an end to it. Yesterday, I received another letter from them in exactly the same format as the other one descibed above. I phoned them up and received a completely different attitude form the operative who insisted that the MINIMUM payment was £150 and this was calculated from the interest plus a small top up amount. I was dumbfounded, and I am pretty sure she was wrong in this calculation as this is over double the amount of a card's interst value at 17.5%, she was adament she was correct and then went on to tell me that the interest rate is actually 23.9%. This of course shocked me and I asked her when this rate rise had happened and she replied that I had received notification in the post in a previous statement - which of course I hadn't. I am actually totally shocked that the card has risen by this huge amount, over a third more in terms of interest rate which borders on the interst rates of those who are in bad credit. I expressed this to her and in her condescending tone, she made me aware that this was a variable rate credit card. I then told her that i had spoken to an operative on the previous month who took off the penalty and accepted that I was OK to pay direct at £70 per month until circumstances changed. She then went away to check this and after a significant amount of time, came back and accepted that the other operative had OK'd that and it was acceptable to pay £70 as I am doing now

I think the only thing I did wrong here was not to inform them I was stopping the direct debit and was changing to a direct payment. What I am interested in is the fact that they have changed the interest from 17.5% to 23.9% without telling me and how they have incredulously decided that the minimum payment is actually £150 based on their interest calculations. I have never at any point paid late and I have paid slightly more than the amount based on a £3K limit and minimum payment. I have looked on their website and the credit cards are offered at 16.9%, so I have no idea how this value has risen to 23.9% and is not reflected on the website?

Can anybody advise me on the issues above, I know it a bit of a long one, so apologies for that, many thanks?

stephane_2

They are right...they can decide to increase your interest at any time by any amount as long as they give you notification of the increase. You then have the choice to refuse the increase, but then they'll ask you to pay at least the minimum payment unless balance paid off & you will not be allowed to use the card any more, they will block it. Or you accept the interest increase & can still use the card.
Generally they inform you by way of a letter or a notification of the statement itself.
By only paying £70 a month they are likely to record this with all the credit reference agencies and as a result your file might be badly damaged for the next few years and as a result you might not be able to get any form of credit at all.
You should get the agreement in writing so that you have some sort of back up.

bethyblue612

There is nothing wrong with changing from direct debit to direct credit, but it sounds as though you calculated yourself what you thought the minimum payment was? You should have taken it from the statement.

Not sure about the change in interest rates, but I believe they do have to give you notice, and you can choose not to accept the increase, as long as you don't make any further purchases on the card. I'm sure someone more knowledgable than me will be along shortly with a link that explains it.

markoone

Thanks for the responses. I am not sure how my payment would be more than those on similar interest rates, and that's why I put in what I thought would be the minimum payment + a little bit more. This is probably a mistake, but still not sure on the calc's. I have looked at my online statement and it shows the interest this month as being £54, so £70 should more than cover it. I also see that the £12.50 charged has been refunded. I dont fully understand why my name could potentially get a bad mark against it as this payment seems to cover whats required?

I'm interested in the other thing stephane said in that "I can refuse the increase" - how do I do that? I would like to do that as I don't plan to spend on the card anyway, is this something I can actually do? Not heard of that one before.

Many thanks for the help.

bethyblue612

Your minimum payment isn’t just to cover the interest, it is calculated on a formula which may be on your statement and will be in your credit agreement, maybe 2% of the outstanding balance. Your statement will say on it somewhere, “Your minimum payment is £xxx”, or words to that effect.

You could have refused the interest increase if you had done it when they notified you of the change, not sure that you will be able to do it now, but it may be worth a phone call to ask them. You will no longer be able to use the card for new purchases, and it will be closed (I think) when you have paid off the balance.


With regards to your credit record, if you are not making the minimum payments, or making them late, then it will show up as a black mark.

Daisy_Duck

Hi

Your online statement will not only show the interest added in a month (you say it shows as £54) it will also tell you the minimum payment for that month and the date it is required to reach your account by. You are not expected to look at the interest and add a bit more, effectively guessing- it will state the minimum explicitly.

As for refusing interest rate increases- yes you can do this when it is advised. So, when the letter or statement arrives advising you of an increase then you can contact the credit card provider and opt out of the increase. If you do this however, the account will then not be available for you to use at a later date- it will be closed when you make the final payment and clear the debt.

You would need to take a look at when your rate was moved up- if it was a long time ago then you may be too late. If you receive online statements then this was likely advised on a previous statement.

stephane_2

When you receive notification of the increase you generally have a few weeks to come back to them...if you don't say anything then the increase happens automatically...if you want to refuse it then yu need to call them.
You might have a black Mark on your file if the monthly payment yu are making does not cover the minimum required. They might record on your file "arrangement to pay". I strongly suggest that you look at your credit card T&C to see how they calculate the minimum payment...but when I was with Natwest if I can remember correctly it was 3% of the outstanding balance.

markoone

Hi, thanks for all the responses.

I have been doing some research and this of course confirms the advice given here. What I also found is that you have 60 days to make that refusal, AND they have to write to you TWICE to inform you of this. I am not lax when it comes to anything received by the bank, and I know I have not received anything. if I had received notification of an increase like that, I would have been looking for advice on whether this is a reasonable increase. I have been looking at previous statements and it looks like the interest in terms of the actual money value, is based on 17.5%, and the last interest value in June was £57, so I am assuming that the 23% is not yet in effect and I should hopefully be within my 60 day grace period, even though I didn't actually receive anything anyway - but of course have no way to prove this and expect I am onto a losing journey if I say I didn't receive it, I just know if I had received notification twice, I would have acted on it - so, lets see what happens when I ring them to see (can't do it yet as in the office)

bethyblue612

If your balance is £3,000, then 17.5% interest is £40 per month and 23.9% interest is £54 per month, so it sounds as though you have been on 23.9% for a while. How long has your interest amount been £54-ish?

bethyblue612

As an added thought, don't they now have to tell you on your statement what rate you are being charged? 17.5% is 1.353% per month, 23.9 is 1.802.

markoone

bethyblue612 wrote: »

If your balance is £3,000, then 17.5% interest is £40 per month and 23.9% interest is £54 per month, so it sounds as though you have been on 23.9% for a while. How long has your interest amount been £54-ish?

Interest in April was £58.96
Interest in May was £57.02
Interest in June was £57.71
Interest in July was £54.43

I haven't made any purchases since January I think, so not sure about the slight increase in June?

I don't have previous values, but as far as I know its always been around that point. I was under the impression that was the value?