Min Payment going Up???

kahunababy

Hi you lovely wise lot, quick question for you.

My mum has a credit card that she hasn't used for the last 8 months and has just been paying slightly over the min. The card is with Lloyds TSB. She did have a rate hike back in July (she thinks) but since then her min payment have been going up by a couple of pound a month even though her balance has been coming down.

I know this happened to me late last year but I managed to clear mine and thought no more about it.

Does anyone have an idea why this could be happening? I am trying to advise her over the phone so I don't have any statements to look at or anything although I am planning on a visit in March so might be able to have a proper gander then.

Buzby

Most of the card operators have been raising the minimum payment, as this is a small step in clearing the balance oweing earlier. After the minimum fee (which is fixed at the prevailing rate), the balance remaining is then used to calculate the remainder of the minimum amount to pay if over the base repayment threshold.

kahunababy

Thank you for the reply. I'm not sure I understand it though?!?!?! Surely, if the balance is going down then the min payment over the min payment should also be going down. Sorry if that doesn't make sense, I'm confussing myself now!

Tixy

It shouldn't be going up every month if the balance is coming down. It might go up slightly from one month to the next (due to different payment period lengths) or in 1 hit if they change the minimum payment calculation (eg as MBNA did last year), which they would have to notify her of first, or if the interest rate rises.

Obvious question but are you sure the balance is coming down? there isn't for example anything such as PPI being added to the account each month which actually is resulting in the balance increasing even after the minimum payment?

kahunababy

Thanks for taking time to reply.
I will have to check about PPI although she claims not.

It really does have me stumped. The balance is coming down as each month but not by much and her min payment is going up each month, again not by much but since Sep it has risen a total of £21 which is a lot to her. For example, her min payment last month was £68 and she payed £70. Next month it is £71.

Do you think this could have anything to do with when she pays it? Her payment isn't due until the 17th of the month but she always pays it earlier on the 2nd (or there abouts)?

CLAPTON

even if the interest rate is unchanged and the minimum payment rules are unchanged (are they ?), there will be fluctuations from month to month as the actual interest depends upon how many days there in the accounting month.
the number of days depnds upon the basic month, when weekends and bank holidays occur
however the overall amount should fall s the balance decreases unless the rules or thr APR has changed.

chattychappy

Yep something wrong if it's always going up. You really do need to get hold of the statements to see what's going on.

Could it be a CPA (continuous payment authority), or even fraudulent transactions?

kahunababy

Thanks for all the advice. I have asked her to send me her last 3 statements so I can try & work out what is going on. I should hopefully have them by Friday so I will keep you all posted once I can see it in black and white.

kahunababy

Hello all, right, had a little visit to see my darling mum and try to get to the bottom of this. She was rather cagey at first which was unusual then she came clean that she actually owed closer to 13k on the credit card!!!!! I could have fainted. Anyway I now have statements going back to September. Here goes:

Sep Balance: £12,308.18
Sep Min Pay: £269.59

Oct Balance: £12,241.12
Oct Min Pay: £264.15

Nov Balance: £12,195.04
Nov Min Pay: £284.90

Dec Balance: £12,098.87
Dec Min Pay: £249.32

Jan Balance: £12,056.64
Jan Min Pay: £268.04

Feb Balance: £11,999.95
Feb Min Pay £273.31

As you can see, the balance is coming down but the min payment is jumping all over the place. On her statement it says the APR is 22.45% (variable) if that helps.

She is trying really hard to get it under control and I have now got the card with me so she can not use it. She has no other credit at all. She has never missed or paid late on this account and although she has withdrawn cash on this card (!) the statement claims that the interest is the same for both so I don't see how that could affect it. She hasn't spent on the card since June last year.

Anyone have any advice? Even if it is just to explain what is going on so she knows what to expect on her next statement as she currently dreads it falling on to the mat.

Many thanks in advance x

jonesMUFCforever

What's the limit on the card? Has she gone over the limit at all due to interest and charges?

kahunababy

The limit is 13k and she has never gone over £12,500. It is all rather confusing. Not sure if she should just ring and ask them about it but I know she will get nervous and just take whatever they tell her as gospel.