Lloyds Credit Card Letter RE: Changing the way they calculate interest...

Dobbibill

YorkshireBoy wrote: »

.Yours must be an old account too then, if you're still on the old 2% minimums?

I genuinely have no idea what % the minimum is on mine as I never look and just pay it off in full each month

zerog

I don't see the harm in applying for a balance transfer card even if the chances of rejection are high.

[Deleted User]

socks_uk wrote: »

I've had a letter through the post (looks genuine) from Lloyds about my Lloyds Avios Duo credit card. It says...

"The way we calculate your minimum payment is changing.

From your March 2015 statement onwards the way we work out the minimum payment on your account will be changing.

The new calculation will bring you in line with the current industry standard, making it easier for you to compare credit card options in the future. So, your minimum payment will be worked out using whichever is the highest of these two options:

Balance in full if your balance is £5 or less or,
1% of your balance + interest + default fees."

At the moment my minimum payments are around £118 but I have a payment set up for £130 to come out of my bank account to pay my monthly fee which, in turn, cancels the direct debit from paying the minimum payment. BUT, my NEW minimum payment in March is quoted as being £148.90. So much for me trying to pay more than my monthly fee to help try to pay it off!

For as much as I would love to clear my debt (£5746) by overpaying each month or having a 'low % life of balance transfer', my husband is paying off his debts with help from Step Change and I am aware that his debts will reflect on my own credit rating so am doubting I would be accepted for a balance transfer.

I suppose I came here today to, firstly, see if anyone else had mentioned receiving the letter from Lloyds (or any other banking group saying the same thing) and is it genuine but secondly to see if anyone can help me understand it as I'm not sure I can.

Hope someone can help, I thought I was starting to get on top of things.

I can't tell you if the letter is genuine and I don't have that card

But I can confirm that the change described is indeed the latest industry standard.

If you are not paying at least that amount already, you really are not making hardly any dent in the amount owed.

You need to refer to your current agreed terms to see what it says about how the minimum payment is currently calculated

e.g. it may say only 0.2% plus interest & fees (I'm sure some Barclaycard accounts are currently on this)

Your monthly statement will clearly state what the actual minimum payment required that month is, and it's your responsibility to ensure that at least that is paid on time.

But if you have a DD set up for the minimum payment, then the card company should be attempting to collect that from you on the advised date
(Some card companies will anyway, some won't if you've in the meantime pay the minimum payment, but either way if you've not paid the minimum, then they should be attempting to collect)

If you are stuggling to repay your debts (and I mean repay, not just stand still paying barely more than the accruing interest & charges) then ask for help on the Debt Free Wanabe board

Lloyds_Bank

socks_uk wrote: »

I've had a letter through the post (looks genuine) from Lloyds about my Lloyds Avios Duo credit card. It says...

"The way we calculate your minimum payment is changing.

From your March 2015 statement onwards the way we work out the minimum payment on your account will be changing.

The new calculation will bring you in line with the current industry standard, making it easier for you to compare credit card options in the future. So, your minimum payment will be worked out using whichever is the highest of these two options:

Balance in full if your balance is £5 or less or,
1% of your balance + interest + default fees."

At the moment my minimum payments are around £118 but I have a payment set up for £130 to come out of my bank account to pay my monthly fee which, in turn, cancels the direct debit from paying the minimum payment. BUT, my NEW minimum payment in March is quoted as being £148.90. So much for me trying to pay more than my monthly fee to help try to pay it off!

For as much as I would love to clear my debt (£5746) by overpaying each month or having a 'low % life of balance transfer', my husband is paying off his debts with help from Step Change and I am aware that his debts will reflect on my own credit rating so am doubting I would be accepted for a balance transfer.

I suppose I came here today to, firstly, see if anyone else had mentioned receiving the letter from Lloyds (or any other banking group saying the same thing) and is it genuine but secondly to see if anyone can help me understand it as I'm not sure I can.

Hope someone can help, I thought I was starting to get on top of things.

Hi socks_uk,

I can confirm that the letter is genuine.

As mentioned in the letter, the changes will bring you in line with the current industry standard for minimum payments. That should make it easier for you to compare credit cards in the future. The change may mean that we're asking for more as a minimum payment each month, but this will bring down the balance on the credit card more quickly and so less interest is incurred in the long term. Just to clarify, it's not a change that's being made for the bank's benefit, it's about making sure customers clear at least 1% of their balance each month (plus any interest and default fees).

If you do have concerns about the new payments or believe it may cause you financial difficulty, please do get in touch with us on 0808 145 0411 (lines are open Monday to Friday 8am-9pm and Saturday 8am-5pm). One of my specialist colleagues will then be able to discuss your options and assist.

I hope this helps,

Craig

AJXX

FYI, I also got this letter. Although I currently don't have a balance on the card so not too bothered about it.

Mines a Lloyds Platinum Mastercard

eskbanker

Lloyds_Bank wrote: »

Just to clarify, it's not a change that's being made for the bank's benefit

Obviously paying back more sooner is ultimately in a customer's long-term interests (albeit with short-term pain) but it's a bit steep for Lloyds to imply solely altruistic motives here! It's clearly beneficial to the bank to increase minimum repayments, both in cashflow terms but also in reducing the risk of customers defaulting on static accounts....

PeacefulWaters

eskbanker wrote: »

Obviously paying back more sooner is ultimately in a customer's long-term interests (albeit with short-term pain) but it's a bit steep for Lloyds to imply solely altruistic motives here! It's clearly beneficial to the bank to increase minimum repayments, both in cashflow terms but also in reducing the risk of customers defaulting on static accounts....

It reduces their profit because less interest is being charged.

jonesMUFCforever

One ''good'' thing is that in an emergency they will now be charging same interest on a cash advance as normal transactions.

callum9999

eskbanker wrote: »

Obviously paying back more sooner is ultimately in a customer's long-term interests (albeit with short-term pain) but it's a bit steep for Lloyds to imply solely altruistic motives here! It's clearly beneficial to the bank to increase minimum repayments, both in cashflow terms but also in reducing the risk of customers defaulting on static accounts....

I don't think Lloyds have ever said their policies are solely altruistic?

As has been pointed out, they'll get less profit in the long term due to less interest being charged. I don't know whether the drop in interest income will be offset by a drop in defaults or not, but I suspect the latter - otherwise why would Lloyds not have done this long ago?

jonesMUFCforever

callum9999 wrote: »

I don't think Lloyds have ever said their policies are solely altruistic?

As has been pointed out, they'll get less profit in the long term due to less interest being charged. I don't know whether the drop in interest income will be offset by a drop in defaults or not, but I suspect the latter - otherwise why would Lloyds not have done this long ago?

Can I disagree with you here?
The new rates are x% + BASE RATE.
In a couple of years if base rates go back up they will be coining it in.