Why????

vworried

Why do credit card companies bump up interest so much? Surely they must know that if they put it too high people are no longer able to pay? This strikes me as a big case of cutting your nose off to spite your face by these companies. If they hadn't jacked up the interest I would not be on a DMP and they would actually have succeeded in getting MORE money out of me.
Rant over. :mad:

DCFC79

vworried wrote: »

Why do credit card companies bump up interest so much? Surely they must know that if they put it too high people are no longer able to pay? This strikes me as a big case of cutting your nose off to spite your face by these companies. If they hadn't jacked up the interest I would not be on a DMP and they would actually have succeeded in getting MORE money out of me.
Rant over. :mad:

Dont you think the customer is also responsible for not overspending on the card ?

oldsmokie

The card companies would say it's risk. Not paying on time, going over limit and/ or constantly running the account at its limits indicates potential financial difficulties and risk of default.

Having said that, the banks have been particularly cynical in their reaction to the 0.5% base rates. How they can justify normal lending rates in double digits and net savings rates below inflation beggars belief.

vworried

Well, DCFC79, I just asked a simple question and didnt expect quite such a curt answer but never mind. There seem to be many people on here who are in DMPs because of interest rate hikes and if rates hadn't been hiked they could afford their payments. There are also many reasons for why people use credit cards etc and I don't think a blanket judgment of everyone is quite appropriate as it is somewhat dismissive of individual circumstances.
Oldsmokie, I agree with what you have said and I think you have presented a balanced picture - I think also that the increase of interest rates due to "risk" is a self-destructive act because it actually increases the risk of a default.

R_P_W

Just out of interest what was your rate and what has it moved to?

I don't think rate increases are the root cause of people being on dmp. Maybe a change in income, maybe spending more than people could afford without really having a plan to pay it back.

matttye

You can reject interest rate hikes and carry on paying your existing debt at the existing rate, but won't be able to borrow any more on the card.

More info here: http://www.moneysavingexpert.com/reclaim/credit-card-interest-rate-increases

danthemoneysavingman

That may also be a useful way to help you start repaying your debt without accruing more. Sounds like that would be a good plan?

datlex

Santander upped mine. Though since I pay it off in full, they don't gain. Nevertheless, I complained so that they had to waste money sending me out letters- I appreciate only a small cost to them but always good to inconvenience them even slightly in this sort of situation.