MBNA - increase in rates

Moaning_Minnie

Anyone any idea why MBNA have increased their credit card rates? Hubby has just received a letter telling him they are increasing the rate from 16% to 24% for purchases!
The letter said to call if you were not willing to accept - he did. Account will be closed as soon as he pays off the balance. How can they justify a rise like this when interest rates have not moved in years! Think we will clear the balance on our other cards first since this was the cheapest.

malcolmffc

They don't have to justify it. When you signed up for the card you agreed they could raise the rate at any time, for any reason.

chattychappy

They have increased the price of credit to hubby hoping he will be happy to pay.

Seems he isn't - in this instance, MBNA lose.

Rafter

It is called 'customer value management' and is a way of extracting the maximum possible income out of your husband.

They can see you don't pay off your balance in full but do pay at least the minimum each month.

Their computer models tell them that if they increase the interest rate you will pay more interest over time, but are unlikely to go bust and so as a profit maximising company they increase your rate.

They know some customers won't like it and might leave, but the majority don't have any choice or can't be bothered so they will make more profits than if they simply continued with the same rates and treated customers fairly.

Personally, I don't think this is very ethical or should be allowed. Interest rates should only be increased if the card company has experienced a change in their cost of funding or if you are a higher credit risk than when you took out the card.

Otherwise, the 'representative' APR when you applied is a nonsense if the card company can simply up your rate in the future because it feels like it.

R.

Rupert_Bear

I have checked mine and have the MBNA Plat. card and interest still at 12% for cash and purchases. However as I clear the card each month does not really matter.

Wilseus

Hi, a very similar thing has happened to me recently with my NatWest gold card. They recently sent me a letter telling me they they're increasing the interest rate from the mid-teens (I can't remember exactly what) to about 20%.

The letter was quite polite compared to one I got from Virgin (MBNA) a couple of years back when they pretty much DOUBLED my APR to 30%! They also reduced my credit limit from £3500 to £300. I paid the (small) balance off as soon as I could and then told them to shove their crappy card up their !!!!.

Should I do the same with NatWest when I am in a position to do so? There IS a rather large balance currently on the card (about £1700) which I am currently paying off bit by bit, so they've got me by the short-and-curlies for now I guess!

I also have a current account with NatWest, although it's not my main one, I wonder what would happen if I threatened to leave them completely?

Wilseus

EDIT: In both cases, the letters additionally stated: "If you are not happy with this then you can keep the APR the same but you can no longer use the card, and the account will be closed when the balance is paid off."
Are they legally obliged to say this I wonder, or are they just being belligerent?

callum9999

Wilseus wrote: »

Hi, a very similar thing has happened to me recently with my NatWest gold card. They recently sent me a letter telling me they they're increasing the interest rate from the mid-teens (I can't remember exactly what) to about 20%.

The letter was quite polite compared to one I got from Virgin (MBNA) a couple of years back when they pretty much DOUBLED my APR to 30%! They also reduced my credit limit from £3500 to £300. I paid the (small) balance off as soon as I could and then told them to shove their crappy card up their !!!!.

Should I do the same with NatWest when I am in a position to do so? There IS a rather large balance currently on the card (about £1700) which I am currently paying off bit by bit, so they've got me by the short-and-curlies for now I guess!

I also have a current account with NatWest, although it's not my main one, I wonder what would happen if I threatened to leave them completely?

I doubt they'd care in the slightest if you left completely.

If you have £1700 on the card and have no intention on adding to that balance, then call them up and reject the rate increase (which will then close your account, locking in your old terms).

This is a general point - not aimed at you - but people need to start getting to grips with the fact that banks are not your friends, they are major international businesses who care about their profit - not you. Similarly, they aren't specifically out to get you personally. If they feel they'll make more money if they raise the APR for a load of people - they'll do it. If they feel they'd be better of if they slashed a load of credit limits - they'll do it. If they feel they'll be better off by increasing charges - you get the picture!

Wilseus

Thanks for your comment callum9999. I am well aware that banks (and Building Societies, despite what they keep telling us) are not my friend! However, I still expect to be treated as a *valued* customer!

I *would* reject the increase, however I desperately need to get my kitchen roof fixed...

FWIW I will be able to pay the whole lot off several times over in about 1 year's time when I will get quite a bit of cash from my work share scheme! :j I'd just like to minimise the interest I am paying in the meantime!

garynuman

Phone them up and reject the increase. The window to do this short so you should do it straight away or the new rate will apply automatically.

If you reject the increase and then spend, I understand the new rate affects the whole balance. :mad:

Gaz

getzls

garynuman wrote: »

Phone them up and reject the increase. The window to do this short so you should do it straight away or the new rate will apply automatically.

If you reject the increase and then spend, I understand the new rate affects the whole balance. :mad:

Gaz

That's right, make sure you don't use it again after you reject it and get your rate froze. Becareful incase you have anything linked to this card i.e. a renewable of say, a membership.