What! can they do that?

Lucue

I've just been offered a loan from a super market at 5% over 5 years to pay off my credit card debt saving me £100 per month in payments, the money is in my account ready to use.

Just recently my bank keeps sending me letters to tell me that if I only pay minimum payments on my credit cards each month it will take longer to pay off the balance, so I called them to complain that if they had explained this to me when I first took out the cards I wouldn't be in the situation I'm in now and that I can't afford to pay any more a month, so I'm just stuck paying the debt over and over again, at no point did I ask them for help in paying my debt nor say I that I couldn't make my payments each month, but to my complete surprise and horror the bloke from the bank told me I had enough in my current account to pay off the cards! I told them the money isn't mine.

What! can they do that? the credit card department looking without my permission at my bank account balance? So now really annoyed with this I made a formal complaint, today my bank called me back to firstly apologise that I was uninformed when I took out the cards and as a goodwill gesture offered me interest free for 3 months on both cards and also £50 paid into my current account for looking into my current account without my permission, do I except this? I told them I'd think about it.

So my dilemma now is, as with my new loan I took a 2 month breather break before my first payment, if I except the 3 month interest free offer on the cards, do I pay the cards off at the end of the 3 months or in 2 months, this has all took me a bit by surprise, firstly I didn't expect to get the loan in the first place, then now all this with my bank I don't really know how to go with it.

Any advise would be much appreciated.

grumbler

Lucue wrote: »

...What! can they do that? the credit card department looking without my permission at my bank account balance?

Why not? It's the same bank after all. Under certain circumstances they can even take the money without your permission: Dont Bank With Debts
I am surprised that they offered you £50.

So my dilemma now is, as with my new loan I took a 2 month breather break before my first payment, if I except the 3 month interest free offer on the cards, do I pay the cards off at the end of the 3 months or in 2 months, this has all took me a bit by surprise, firstly I didn't expect to get the loan in the first place, then now all this with my bank I don't really know how to go with it.

You can pay now or in 3 months. Just calculate what interest you can earn for keeping the money for 3 months in your current or savings account, then make your mind. It's not a rocket science.

tomtontom

Do people need to be told that only paying the minimum amount means it will take longer to pay the debt off? If so, I would suggest not taking out any further credit until you understand how it works. You can get advice on debt management on the Debt Free Wannabe board.

PeacefulWaters

Lucue wrote: »

Just recently my bank keeps sending me letters to tell me that if I only pay minimum payments on my credit cards each month it will take longer to pay off the balance, so I called them to complain that if they had explained this to me when I first took out the cards I wouldn't be in the situation I'm in now

With the greatest respect, it's blindingly obvious.

and that I can't afford to pay any more a month, so I'm just stuck paying the debt over and over again, at no point did I ask them for help in paying my debt nor say I that I couldn't make my payments each month, but to my complete surprise and horror the bloke from the bank told me I had enough in my current account to pay off the cards! I told them the money isn't mine.

What! can they do that? the credit card department looking without my permission at my bank account balance?

If it's the same company, yes. Your first moan is that they didn't tell you something. Your second moan is that they did tell you something.

So now really annoyed with this I made a formal complaint, today my bank called me back to firstly apologise that I was uninformed when I took out the cards and as a goodwill gesture offered me interest free for 3 months on both cards and also £50 paid into my current account for looking into my current account without my permission, do I except this? I told them I'd think about it.

No, you accept this remarkably generous offer. They've done nothing wrong and they're paying you for it.

So my dilemma now is, as with my new loan I took a 2 month breather break before my first payment, if I except the 3 month interest free offer on the cards, do I pay the cards off at the end of the 3 months or in 2 months, this has all took me a bit by surprise, firstly I didn't expect to get the loan in the first place, then now all this with my bank I don't really know how to go with it.

Usually I'd say maximise any interest free period. In this case I'd suggest paying off the debt, making sure you don't build up a new card balance, and get on with life.

SuperHan

tomtontom wrote: »

Do people need to be told that only paying the minimum amount means it will take longer to pay the debt off?

More importantly, how can anybody this that's NOT the case.

If I pay 100% off this month, it's paid in 1 month. If I pay 50% off, it'll take two months plus a little interest.

If I make the minimum payment (say 1%) it'll take 100 months and a lot more interest.

I honestly cannot conceive how you can think differently, and thinking paying off 1% would be in anyway quicker and cheaper than paying more....

stator

If it was me I would just pay them off and be done with it. Sure you could earn a few pennies interest by holding the money in a savings account for a few months, but there's always the risk of something else happening in the mean time. Just pay them off, close all but one of the credit cards and move on with your life.

If it's the same bank with the current account and credit card I wouldn't be surprised or shocked if they could see your balance when you talked to them. If they are different banks I would be annoyed. Take the compensation, it's not that big a deal.

Lucue

Many thanks for all your sympathetic & understanding replies!

Monkeyballs

Out of curiosity, if you were aware what would you have done differently? I'm not sure I understand, are you saying you would have paid the full amount off in full each month as it sounds like you have too much debt to be able to be able to do that?

Best advice I can offer is take the £50 and unless the interest you will accrue is more than say £10 use the consolidation loan to pay your debts now before you do something silly (easy done). Once you've done that I'd cancel all but one card and reduce the limit on that card to perhaps £500...

MB

jo-bo

If you're looking for sympathy then post on mumsnet.

dealer_wins

Its all in the terms and conditions that you did read carefully didnt you? and agreed to when you signed the agreement.

thebritishbloke

SuperHan wrote: »

If I make the minimum payment (say 1%) it'll take 100 months and a lot more interest.

It would actually take even longer than 100 months, as you're paying 1% of the balance for that month, not 1% of the original balance every month.