MBNA (AA) credit card sleight of hand

chattychappy

prowla wrote: »

The T&Cs state that you must pay at least the minimum amount each month by the due by date.

Precisely. It's just your interpretation of what that means (in the context of the rest of the T+Cs) is different from other people's.

MonkeyMad

And your statement tells you the minimum amount you must pay by that due date, so are you being deliberately obtuse?

From the MBNA Credit Card T&Cs:

You must pay at least the minimum payment each month and this must reach your account by the payment due date.
The minimum payment will be:
• the balance on your statement if it is £25 or less; or
• the greater of £25 or 1% of the balance on your statement before any default charges, card fees and interest (to which we will then add an amount equal to the default charges, card fees and interest);
plus the amount of any arrears, which are repayable immediately.
If a balance of £1.00 or less is left after we have worked out your minimum payment we will also include that amount in your minimum payment.
If you receive a refund or credit to your account after your statement date, you must still pay at least the minimum payment that we have asked for.

2.1 The ways you can pay us, the information you must give us and how long you should allow for your payments to reach your account can be found on your statement. You must pay at least the minimum payment
each month and this must reach your account by the payment due date. If you pay by cheque or direct debit we will assume there are sufficient funds available and will credit your account with your payment. You will only discharge your payment obligation when that payment is cleared. We will choose your payment due date and
show it on your statement. At any time you can also repay all or part of your outstanding balance.

2.2 The minimum payment will be:
• the balance on your statement if it is £25 or less; or
• the greater of £25 or 1% of the balance on your statement before any default charge(s), card fee(s) and interest (to which we will then add an amount equal to the default charge(s), card fee(s) and interest);
plus the amount of any arrears, which are repayable immediately.
If a balance of £1.00 or less is left after we have worked out your minimum payment we will also include that amount in your minimum payment. If you receive a refund or credit to your account after your statement date, you must still pay at least the minimum payment that we have asked for

15 Your statements
15.1 Each month that there is activity on your account we will supply you with a statement. It will show all the amounts we have added to your account since your last statement.

The 'minimum amount' is a defined term in the T&C - there is no ambiguity as to what it means; it does not exist until the statement is generated so you cannot possibly make an advance payment. The date by which payment of this 'minimum amount' is given as the payment due date and is given on the statement. MBNA say this statement forms a reminder and addition of the T&C - there is no ambiguity. The statement is a defined term and is a record of all activity on the account between billing periods - there is no ambiguity.

In summary, the T&C defines the amount you owe each month, they define the amount you should pay each month, and the date by which you should pay is supplied in a monthly statement forming an adjunct to the T&Cs. MBNA would be more than happy to contest this with FOS, or anyone else who cared to argue, since to to mis-interpret this requires real effort. Especially to do it more than once.


Beat my predictions. More than 100 posts and still cannot acceptt that the monthly minimum is levied on the balance at time of generation of statement. Even though that is what the T&Cs say in at least two places. Unbelieveable

prowla

molerat wrote: »

The bill / statement, call it whatever you like, clearly states that the minimum payment of £xx.xx must be paid by xx.xx.xxxx. If you make a payment before the production of that statement it is accounted for in that statement and the terms of payment stated on that statement still stand.

Actually, that is good explanation, and is the first useful thing that any of the responders have said on this thread, and it explains the mechanism they are using.

However, the credit card agreement (ie. the contract) does not state that the month's payment must be made after receipt of the bill/statement.

The agreement states: "You must pay at least the minimum payment
each month and this must reach your account by the payment due date.", and "The minimum payment will be ... the greater of £25 or 1% of the balance ...".

Therefore paying earlier in the month than the statement is produced precisely and exactly complies with the stipulations specified in the agreement.

Items that aren't stated in the contract and/or are assumed to be the case are not part of the contract.

prowla

Cell wrote: »

God knows whether this will help, but here are three examples of how my card issuers treat payments, statement dates etc.

Barclaycard.

Minimum payment is due on xth of the month and that is the date that the statement is issued as well. If I want to pay my minimum off early for the next month I KNOW not to pay until the new statement is produced.

Marks & Spencer

Minimum payment is due on xth month, and I pay that by direct debit. However then statement is issued five or six days (can't recall which) later. If I pay extra between the direct debit and the statement date this is applied to the current statement (ie the one which the DD applies to). Indeed if I pay enough to clear my previous statement in that window I get charged no interest at all, despite it being after my minimum payment date.

If I didn't pay the minimum by the date due but cleared my balance in the window then I KNOW I would be in default of the agreement despite clearing the statement balance before the next one is produced. The minimum payment date is a condition of the account and I understand that.

Cahoot

Statement issued 14th of the month. Minimum payment due 28th of the month. I can pay anything I like before the 28th and it will apply to the current period. If I pay it early enough the direct debit will be reduced (though different cards have different rules - MBNA collect the minimum regardless as do M&S). But I MUST have paid at least the minimum by 28th regardless of how much I pay between 28th and the date the next statement.

It's not enough to make teh minimum payment in any statement period. It has to be paid by the date stipulated, even if your next statement, as with Cahoot, is a couple of weeks away or more.

As I said, not sure if that helps.

In reality you find this out more by experience than anything else, but pay the minimum when it's due and you're covered.

Thanks - that's interesting...

So basically different card providers behave differently, and therefore there is not a well known and established industry standard for the circumstance in question.

Cell

prowla wrote: »

Actually, that is good explanation, and is the first useful thing that any of the responders have said on this thread, and it explains the mechanism they are using.

However, the credit card agreement (ie. the contract) does not state that the month's payment must be made after receipt of the bill/statement.

The agreement states: "You must pay at least the minimum payment
each month and this must reach your account by the payment due date.", and "The minimum payment will be ... the greater of £25 or 1% of the balance ...".

Therefore paying earlier in the month than the statement is produced precisely and exactly complies with the stipulations specified in the agreement.

Items that aren't stated in the contract and/or are assumed to be the case are not part of the contract.

If in doubt in an argument like this it's usually a good idea to establish whether anyone else is on the same side of the fence, whether anyone else has experienced the same problem.

If they haven't, and all understand a situation the same way then the odds are that it isn't a problem at all.

If it was ambiguous then far more people would get 'trapped'. So far there's no evidence that anyone has the same view as you do. If the rules are so ambiguous you would expect people to fall foul of them, but we all comply, and have done from day one.

You obviously feel you have a point, but if you do then the rest of the world, independently, appears to have managed to accidentally comply with the terms and conditions.

Cell

prowla wrote: »

Thanks - that's interesting...

So basically different card providers behave differently, and therefore there is not a well known and established industry standard for the circumstance in question.

What IS consistent is that every card will expect you to pay at least the minimum payment by a certain date, whenever that is in the statement cycle. That date is clearly stated.

As credit cards are not a 'collective' product then each provider will have different rules about WHEN the minimum payment is required (in the context of the statement cycle), but they are quite clear, even if when you first take a card out you may not know what applies to each. It may take a month before the gap between statement dates and minimum payment dates are clear.

MonkeyMad

I didn't think it could be this difficult. You cannot pay the 'minimum payment' amount until the statement is generated - this is a defined term. A previous payment cannot be applied to it since it has already been calculated using that previous payment. Would it make more sense to you if the called it 'Payment A' instead? You MUST give us £Payment A when we send you a statement - it really is that easy.

I'm loosing the will to live.

prowla

Cell wrote: »

If in doubt in an argument like this it's usually a good idea to establish whether anyone else is on the same side of the fence, whether anyone else has experienced the same problem.

If they haven't, and all understand a situation the same way then the odds are that it isn't a problem at all.

If it was ambiguous then far more people would get 'trapped'. So far there's no evidence that anyone has the same view as you do. If the rules are so ambiguous you would expect people to fall foul of them, but we all comply, and have done from day one.

You obviously feel you have a point, but if you do then the rest of the world, independently, appears to have managed to accidentally comply with the terms and conditions.

I think that most people tend to pay as near to the due by date as possible, so as to maximise their interest-free credit opportunity.

I would also guess that most people would have noticed the first time it happened and called the CC company, who would then have clarified their expectations and waived the charge on that one occasion.

I chose to let this card sit in the background and did not manage it as well as I should have, and so it's only really by accident and neglect that it happened to me. (The accident being that I chose random dates to make payments and some of them preempted the statement, and the neglect being that I didn't keep tabs on things.)

I've no idea whether this has happened to other people; I assume that it would, and I would also question whether 10 or so people on a financial forum constitute the rest of the world.

Still, it's only about £30 or so, so it's not the end of the world. I'm just about to book a business trip and I'll make more than that by purchasing my flights and accomodation via quidco.

Cell wrote: »

What IS consistent is that every card will expect you to pay at least the minimum payment by a certain date, whenever that is in the statement cycle. That date is clearly stated.

As credit cards are not a 'collective' product then each provider will have different rules about WHEN the minimum payment is required (in the context of the statement cycle), but they are quite clear, even if when you first take a card out you may not know what applies to each. It may take a month before the gap between statement dates and minimum payment dates are clear.

Yes, I have never for a moment suggested there was anything wrong with the due by date, nor that it was not clear. (Well, actually some cards seem to deem it to be by COB on the due by date, and others seem to expect it to have been done by the start of the day, but that's another question - the interpretation of the word "by".)

But it is not stated with absolute clarity from when the payment may be made within the given month. There appears to be an assumption, but it is not stated. Nobody has shown the clause in the agreement that specifies that.

Cell

prowla wrote: »

I've found out that if I made payments before a given month's statement date then they would not count towards that statement

Going back to the very first post, and despite the many replies, this is the core issue.

I think that the problem is the use of the term 'month'. You've interpreted that to be a calendar month, while in credit card terms it actually means the time between one statement and another (which can actually be slightly more, or less, than a calendar month on occasions.

Technically, semantically, I can therefore see your point, but on a day to day basis I reckon most people intrinsically realise how the word 'month' is intended to be interpreted.

I prefer the use of the word 'cycle', but was never ever in doubt from day one what was meant, and have thus never made a mistake of that type.

An analogy for your original post is trying to pay for your shopping when you enter the supermarket without knowing the prices. You haven't received your bill, and as such can't know what, precisely, to pay off until you've been to the checkout (the statement).

MonkeyMad

Perhaps someone else should do something with Post#103. You can't get clearer than that. We send you a statement, we tell you what you must pay us, you pay it. Simples.

The clause that tells you what you should pay is 2.2 and when you should pay is 2.1. There is no lack of clarity at all.