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

callum9999

jonesMUFCforever wrote: »

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.

1. I was talking about minimum payments, not interest rates, so that is irrelevant.

2. The interest rates have always been variable. They can put them up whenever they like, for whatever reason they like. They don't have to wait for the BOE rate to increase.

YorkshireBoy

callum9999 wrote: »

2. The interest rates have always been variable. They can put them up whenever they like, for whatever reason they like. They don't have to wait for the BOE rate to increase.

I think Jones is saying that there's no customer 'opt out' of an APR increase if base rates rise, like there is with risk-based pricing (ie rate-jacking).


I think Halifax introduced this kind of APR setting a couple of years ago(?)...but then changed back to risk-based pricing?

callum9999

YorkshireBoy wrote: »

I think Jones is saying that there's no customer 'opt out' of an APR increase if base rates rise, like there is with risk-based pricing (ie rate-jacking).


I think Halifax introduced this kind of APR setting a couple of years ago(?)...but then changed back to risk-based pricing?

Are you sure about that? I was under the impression that you could close your credit card account and pay it off under the current terms at any time - not only if there's a rate increase?

thecasementkid

I've received this letter today and my change is from 24th Feb 2015. From my perspective, whenever the BOE bank rate changed before (yes remember those days) my credit card rates never changed and if they did, I always had the option to freeze them at the old rate and pay off the card. If I'm reading this letter correctly, whenever the rate changes now, my Lloyds CC will automatically increase. Will I still be able to freeze the rate and pay off the balance or will they say it's a BOE increase and not a Lloyds increase? Also, funny how this comes in now with the BOE rate so low and only likely to increase. When we eventually get back to normal BOE rates, my CC interest will in effect increase by 5% or 6% (as will everyone else's). This just smacks of potential huge increases by stealth!

YorkshireBoy

callum9999 wrote: »

Are you sure about that? I was under the impression that you could close your credit card account and pay it off under the current terms at any time - not only if there's a rate increase?

This was what MSE said at the time re Halifax/BoS implementing this type of pricing...

http://www.moneysavingexpert.com/news/cards/2011/04/halifax-revamps-credit-card-interest-which-could-lead-to-large-hikes

Scroll down to "Can I reject the change?"...

...if the rate rises as a result of the base rate rising cardholders cannot reject the hike as an exception to this clause includes increases linked to an index such as the base rate.

Atidi

callum9999 wrote: »

Are you sure about that? I was under the impression that you could close your credit card account and pay it off under the current terms at any time - not only if there's a rate increase?

The fundamental rule is that an agreement entered into cannot be changed without the consent of both parties.

If the lender wants to change the terms and the borrower doesn't agree, then the borrower has the right to ask to pay off what is owed under the pre-existing terms (but cannot borrow any more)

If the interest rate is set based as a tracker rate (e.g. base rate + x %) then as long as the x doesn't vary, any change to the APR (because of, in this example, a base rate change) does not change the existing terms.

Lloyds_Bank

thecasementkid wrote: »

I've received this letter today and my change is from 24th Feb 2015. From my perspective, whenever the BOE bank rate changed before (yes remember those days) my credit card rates never changed and if they did, I always had the option to freeze them at the old rate and pay off the card. If I'm reading this letter correctly, whenever the rate changes now, my Lloyds CC will automatically increase. Will I still be able to freeze the rate and pay off the balance or will they say it's a BOE increase and not a Lloyds increase? Also, funny how this comes in now with the BOE rate so low and only likely to increase. When we eventually get back to normal BOE rates, my CC interest will in effect increase by 5% or 6% (as will everyone else's). This just smacks of potential huge increases by stealth!

Hi thecasementkid,

The standard rate of interest is made up of the personal interest rate for the credit card account and the Bank of England Base Rate. If the Bank of England base rate increases, we'll advise our customers of the rate increase through a message on the statement they receive the month following the announcement (the rate increase will take effect from the last working day of the month of the announcement).

With regard to freezing the interest and paying off the balance, if you're experiencing financial difficulties as a result of current interest rates or a potential future increase, please do get in touch. Our specialist team will then be able to go through options with you. The team are available on 0808 145 0411 (lines are open Monday to Friday 8am-9pm and Saturday 8am-5pm).

Thanks,

Craig

thecasementkid

Lloyds_Bank wrote: »

Hi thecasementkid,

The standard rate of interest is made up of the personal interest rate for the credit card account and the Bank of England Base Rate. If the Bank of England base rate increases, we'll advise our customers of the rate increase through a message on the statement they receive the month following the announcement (the rate increase will take effect from the last working day of the month of the announcement).

With regard to freezing the interest and paying off the balance, if you're experiencing financial difficulties as a result of current interest rates or a potential future increase, please do get in touch. Our specialist team will then be able to go through options with you. The team are available on 0808 145 0411 (lines are open Monday to Friday 8am-9pm and Saturday 8am-5pm).



Thanks,

Craig

Thank you for taking the time to respond.

I'm fortunately not in a precarious financial situation and only recently took out a Lloyds card to take advantage of an 18 month 0% balance transfer rate.
However, the standard rate I've been quoted for transactions is 25.75%!! I'm assuming when this new calculation is in place, the overall rate will stay the same but be split 25.5% personal rate plus 0.25% current BOE rate, as the letter explains.
So what happens when BOE rates go back to 'normal' say 5%? My new interest rate will then be 30.5% in total. Are you trying to compete with the Payday loan sector now???
And, when my rate increases because of a BOE rise, can I turn to Lloyds and say sorry, freeze the rate and I'll pay it off, or will you say because it's a BOE inflicted rise, we can't do that and you'll have to pay it back at the new rate.
This is nothing more than Lloyds cleverly implementing a mechanism to take advantage of the inevitable BOE rate increases and being able to blame someone else for them. It stinks!

PeacefulWaters

thecasementkid wrote: »

I'm fortunately not in a precarious financial situation and only recently took out a Lloyds card to take advantage of an 18 month 0% balance transfer rate.

Note that they won't make very much money out of a 0% interest rate.

However, the standard rate I've been quoted for transactions is 25.75%!! I'm assuming when this new calculation is in place, the overall rate will stay the same but be split 25.5% personal rate plus 0.25% current BOE rate, as the letter explains.

So what happens when BOE rates go back to 'normal' say 5%? My new interest rate will then be 30.5% in total.

Sounds about right.

Are you trying to compete with the Payday loan sector now???

If you can find me a PDL that does 0% for a year and a half and then charges less than 2.5% a month I'd be impressed.

And, when my rate increases because of a BOE rise, can I turn to Lloyds and say sorry, freeze the rate and I'll pay it off, or will you say because it's a BOE inflicted rise, we can't do that and you'll have to pay it back at the new rate.
This is nothing more than Lloyds cleverly implementing a mechanism to take advantage of the inevitable BOE rate increases and being able to blame someone else for them. It stinks!

Every single credit card agreement I have signed has had a variable interest rate. Your apparent outrage is quite puzzling. If you don't like the rate shift the balance to a cheaper card or repay the debt.

If you can't afford it you may find the card issuer quite supportive unless you bury your head in the sand.

thecasementkid

Actually, my sarcastic friend, I've also got a 34 month 0% deal with Halifax where the rate is 18.9%. If you can't see the profiteering Lloyds are trying to inflict on their cardholders, then don't bother commenting.
As soon as the interest free period is over, I'm ditching the card. Whilst I'm in a fortunate situation and can do that, my feelings are for the majority of account holders who can't and will be stuck with it.