Halifax grrrrr. How are these practices even allowed??

NokSuCow

:-(

Hi everyone.

Right, so 2 weeks ago my partner changed her mortgage rate with Halifax from 3.99% to 2.49% saving her £55 pm. Great we thought.

Then the same day the letter came confirming the new rate and saving of £55 pm she gets another letter from Halifax telling her that they've looked into her credit report and noticed she's in more debt so they are raising her CC rate from 14.99% to 19.99% which based on her balance of £11k equals to around an extra £50-55 pm in interest, thus basically wiping out that £55 pm mortgage saving. They only raised it last year from 9.99% to 14.9%

Is there everything she can do about this raise?? moving to another card isn't an option nor is paying off the debt.

Also, lets assume she can only pay min payment (1%) on 19.99% for the rest of her life say until shes 80ish. The balance will be almost £500,000!!! Obviously this won't happen but surely there must be safe guards/rules about interest being higher than min payment??

Sorry for rant, just pees me off when a bank would easily find another way of clawing the money back. I mean, they are basically saying 'Just looked at your credit report and notice your in more debt so we're going to make it harder for you to pay it off'

grrrrr

Have a good day.

vns

NokSuCow wrote: »

:-(

Hi everyone.

Right, so 2 weeks ago my partner changed her mortgage rate with Halifax from 3.99% to 2.49% saving her £55 pm. Great we thought.

Then the same day the letter came confirming the new rate and saving of £55 pm she gets another letter from Halifax telling her that they've looked into her credit report and noticed she's in more debt so they are raising her CC rate from 14.99% to 19.99% which based on her balance of £11k equals to around an extra £50-55 pm in interest, thus basically wiping out that £55 pm mortgage saving. They only raised it last year from 9.99% to 14.9%

Is there everything she can do about this raise?? moving to another card isn't an option nor is paying off the debt.

Also, lets assume she can only pay min payment (1%) on 19.99% for the rest of her life say until shes 80ish. The balance will be almost £500,000!!! Obviously this won't happen but surely there must be safe guards/rules about interest being higher than min payment??

Sorry for rant, just pees me off when a bank would easily find another way of clawing the money back. I mean, they are basically saying 'Just looked at your credit report and notice your in more debt so we're going to make it harder for you to pay it off'

grrrrr

Have a good day.

Sorry to hear about your/her situation.

I personally do not think Halifax has done anything wrong here.

I suspect it's just the fact that you applied to change her interest rate on the mortgage which triggered a credit check and naturally they've used that information to update their records.

It might be the case that the credit check would have happened sooner or later anyway...

Tixy

Yes she can opt out of the rate rise. The letter should explain how.

It would mean that she can no longer use the card for new spending, but she can continue to pay off at the same rate she is doing now (and nothing will be recorded on her credit file).

On newer cards there are regulations about minimum payments (which should be at least 1% of the balance plus the interest), but on older cards these do not apply

Mr_Goodkat

Carrying a balance of £11k on a credit card and only making minimum or small payments is always going to risk rate hikes from banks as they consider the possible risk and profit of each account held with them.


A rate rise of 5% last year should have been the catalyst to reject the rate rise and continue paying it off or look to shift the debt to somewhere cheaper.


She can reject this latest increase and pay off the debt at the existing rate but there will be no more spending allowed on the card.


An 11k debt credit card debt is a big debt to shift whether the rate is 9.9%, 14.9% or 19.9%.


Addressing why there is an 11k credit card debt and making changes to raise income or cut spending, throwing everything saved at this debt is the only way out of this.


It would be worth running a few soft searches to see if any balance transfer cards would accept her as getting 0% or lower rate deal will save a lot of money in the long term and mean more of what is thrown at the debt is paying off the capital!

InsideInsurance

If you think she has a reasonable credit history why is she sitting on £11k of outstanding credit card debt?

Halifax's APR for a loan is 3.9% for £11k which is less than her old and new interest rates.

Nasqueron

Why not apply for a BT card - at the very least you can remove a chunk of the debt reducing the interest you accumulate and allow you to pay off more of the debt

NokSuCow

Thank you for replies guys.

Her credit rating isnt great as she has 2 other CC's also where 0% balance transfer was used. Barclays and Nationwide being the other 2 CC's.

Tbh, I didnt know about refusing the increased rate, especially last year. I only questioned it this time as I noticed in the letter saying something about accepting the rate.

I'll get her to inquire about a Halifax loan, but I doubt she would get it due to being in her overdraft all the time. She tried last year.

For now, i'll get her to refuse the increase. The card is never used anyway.

Cheers

System

Get her to phone Barclaycard & Nationwide and see if they have any transfer offers on her existing cards.

They may be able to offer her 0% or a lower rate than Halifax.

NokSuCow wrote: »

Her credit rating isn't great as she has 2 other CC's also where 0% balance transfer was used. Barclays and Nationwide being the other 2 CC's.

InsideInsurance

NokSuCow wrote: »

Her credit rating isnt great as she has 2 other CC's also where 0% balance transfer was used. Barclays and Nationwide being the other 2 CC's.

Tbh, I didnt know about refusing the increased rate, especially last year. I only questioned it this time as I noticed in the letter saying something about accepting the rate.

I'll get her to inquire about a Halifax loan, but I doubt she would get it due to being in her overdraft all the time. She tried last year.

So basically you are saying that she is a fairly bad credit risk and so its not really surprising they are hiking up the interest rate given shes sitting on a large outstanding balances and is also endebted to them on an overdraft?

19,9% is still considered in the normal range so arguably she should be thankful its only been put up to that level.

NokSuCow

InsideInsurance wrote: »

So basically you are saying that she is a fairly bad credit risk and so its not really surprising they are hiking up the interest rate given shes sitting on a large outstanding balances and is also endebted to them on an overdraft?

19,9% is still considered in the normal range so arguably she should be thankful its only been put up to that level.

Thankful??? For putting interest up 10% over a year??

Also, wouldn't hiking up the interest rate on a 'fairly bad credit risk' make them a higher credit risk?? Seems counterproductive to me.

Does anyone know if she does opt out on the higher apr, would it effect her credit report in any way?

PeacefulWaters

NokSuCow wrote: »

Also, wouldn't hiking up the interest rate on a 'fairly bad credit risk' make them a higher credit risk?? Seems counterproductive to me.

The additional income generated exceeds the write-offs from non-payers in the same risk group.

So from a lender's perspective it's absolutely not counterproductive.

Your friend really needs to address those spending habits.