How can a £280 credit card debt turn into a £7,000 debt?

agnetta74

My daughter was given a credit card from Barclaycard with a £280 limit nine years ago. She paid the required monthly instalment for 3 months before losing her job when she was unable to make any further payments. Barclaycard sent her defaulted account to their in-house debt collectors Mercers. When she found a job 9 months later she set up a direct debit for £40 a month after contacting Mercers who agreed to this amount. She subsequently forgot about it and has been paying this £280 debt for 8 years! She has now paid £3,840 and Barclaycard say she owes a further £3,000 plus. We contacted the ombudsman and they have now got Barclaycard to agree to write off the £3,000 plus and Barclaycard have agreed to pay £150 in compensation for 'pain and suffering'. The ombudsman has advised us to take the £150 but I do not think this is enough in view of the amount that has already been paid.

I have asked to see statements from when the credit facility began but was told that the Bank is not required to keep information dating back further than 6 years. Can anyone help with the calculation of minimum payment plus interest for one year?, because they are now saying that £40 a month was insufficient to cover the advance for the first year.

Has anybody else had an experience like this or are there any experts out there that can help me.

CKhalvashi

Accept the amount from FoS, and if there's anything wrong with the agreement, take the matter to court (click here). Barclaycard will probably pay if judgement is awarded against them.

We need to know the APR, plus any fees added to the account first.

CK

sharpy2010

Might be an idea to advise your daughter to check her bank statements a bit more often than once every eight years lol!

CLAPTON

all depends upon the T&Cs but by way of an example

on a 280 debt at say 27% APR the monthly interest would be

280 x 27%/12 approximately i.e. £6.30 per month

the minimum payments would be around 2.5% of the balance so about

280 x 2.5% = £7.22 per month


It seems a great shame that for such trivial sums she wasn't able to ask the family for help.

opinions4u

If you go to court you will probably lose. It would help if you could explain how the debt rolled up - bank fees, interest, court fees, other legal costs?

"Forgetting" is not exactly a great defence.

For me she should take the £150 and be pleased the debt is written off.

£280 limit nine years ago. She paid the required monthly instalment for 3 months before losing her job when she was unable to make any further payments

I'm all for encouraging financial independence. But she created this mess out of a minimum payment that was less than 50p a day.