HSBC credit card interest increase (2nd)

emskyxx

Hi there,

I have a credit card with HSBC (credit limit £4,750) which I have had since April 2009.

When I initially applied for the credit card I was given a £3,750 credit limit with an 18.9% interest rate.

I always paid above the minimum payment (usually about £300) every month until I was made redundant in October 2009 where I cleared the balance apart from about £300.

Since I have been made redundant I have been unable to work and have been only able to make the minimum payments.

Last year in 2011, they automatically increased my limit to £4,750. The responsible thing would've been for me to call them and get it reduced but I didn't and it is now pretty much maxed out. I have no excuses for this, I know this is my own fault.

The payments I've been making on it are between £120-£200 every month. I've never missed a payment with them (or anybody else for that matter)

This morning I received another letter from them to say that from next month my interest will be going up again to 25.9%, so in less than 12 months they've hiked my interest up by 7%.

I was just wondering, is there a reason they keep hiking the interest up? And are they likely to keep doing it? I've banked with them for nearly 15 years, since I was in school, I understand the reason they are probably doing it, is because I only make the minimum payments each month, but it does seem like quite a steep increase in such a short space of time.

Any advice or information would be most appreciated.

Thanks.

I should also add that I know I should've cut the card up when I was made redundant but I just let the balance grow and grow.

YorkshireBoy

2 possible reasons:

1. They've seen a reduction in monthly credits to your HSBC current account, and

2. They take a monthly feed from the CRAs, and maybe this has highlighted debts elsewhere are increasing too?

You do know (the letter should say) that you can reject the increase and stay on the old rate providing you close the account to new spending? But I'm guessing that's not an option with your current situation?

Finally, if you could pay just over (even a pound!) the minimum payment maybe that would fool their systems into thinking you weren't struggling?

Better_Off_1983

This happened to me with the Aqua card, they increased the APR to 45% and I said I did not want it, they closed the account and told me to pay back the balance at the lower rate of about 32% This will be paid off next month.

Do what YB suggests and opt out of the interest hike.

Savvy_Money

It's not all down to the credit file (although in the OP's case it probably is). I have a HSBC credit card (paid off in full each month) and a good credit score (which I know is open to interpretation) however they rate jacked me to 27.9% from 18.9% - not a problem as I paid off in full so the interest rate is no real issue, but my Barclaycard rate is 9.9%, and my John Lewis CC 15% (again all paid off in full) - and John Lewis CC is managed by the HSBC group. Sometimes they want to reduce risk, and technically I do have access to a few thousands hence by rate jacking they sometimes hope the person will close the account.

Reject the new rate and keep paying at the old rate until cleared (account will be classed as inactive anyway by HSBC)