Sneaky Bank of Scotland credit card interest rate recalculation

moatmeister

Just got an "interesting" letter through the post regarding my BoS credit card which currently has a 0% BT on it running successfully. They have invented a new way to calculate the interest rate applied to the card which was an already extortionate 25.95% for purchases. As from mid august this rate will be linked to the bank base rate and will comprise of my personal BoS rate of 25.45% plus the bank base rate of 0.5%, a total to equal the original 25.95%

This is a sneaky move on two counts,

1) The bank base rate is at an all time low and even if it were to drop lower it would make a negligible difference to the overall card rate. It is much more likely to go up thus increasing the card rate.

2) I dont remember them rushing out to implement this plan when the bank base rate was cut from 5 or 6 % which would have resulted in a subsequent drop in credit card rates which instead seem to be steadily rising.

Having this card suits me at the moment for my BT purposes but I will think twice about keeping it at the end of the introductory period.

Another classic case of the banker being someone who will lend you an umbrella on a sunny day but wants it back when it starts raining !!

grumbler

moatmeister wrote: »

...1) The bank base rate is at an all time low and even if it were to drop lower it would make a negligible difference to the overall card rate. It is much more likely to go up thus increasing the card rate.

As you are on 0%, I guess you applied for this card recently, when "bank base rate was at an all time low", not long time ago when all rates were generally higher.

Another classic case of the banker being someone who will lend you an umbrella on a sunny day but wants it back when it starts raining !!

So far they gifted you an umbrella by giving you money at 0%.
Pay your balances in full and you wouldn't care about the interest rate.
If it goes up and you aren't happy with it, just reject the rise, have the last rate frozen and keep paying your debt off while being unable to borrow more. As simple as that.

Unlike loans, all CCs have variable rates. Take it or leave it.

PeacefulWaters

Your interest rate was always variable anyway.

This just allows them to increase without giving two months notice (and might remove the opt-out option).

jonesMUFCforever

Lloyds have been doing this for ages.

YorkshireBoy

jonesMUFCforever wrote: »

Lloyds have been doing this for ages.

As have BoS.


EDIT: For nearly 4 years it seems...

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

YorkshireBoy

PeacefulWaters wrote: »

(and might remove the opt-out option).

The 2011 MSE article linked above suggested that was going to be the case...

However, 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.

Herbalus

I would add that if you get to the stage where you're carrying a balance on the card after your 0% period, then I'd suggest you'd do better directing your energies at sorting those finances than worrying about whether it's 25.95% or a few % more.

Paying interest anywhere near that is not a good place to be. If you're going to be carrying a balance after your 0% interest then you'd want a better solution even if BoS hadn't made this change.

moatmeister

Thanks for your comments. I am not complaining about the rate, it is at 0% for as long as I will need it to be. I am just alerting others to a new (to me, at least) sneaky tactic by the oh-so-trustworthy banking industry to find a way to extort more money out of us! No doubt to pay more of their massive regulatory fines for PPI or Libor rate jacking. I appreciate the 0% deals, they are very useful when managed properly.

PeacefulWaters

moatmeister wrote: »

Thanks for your comments. I am not complaining about the rate, it is at 0% for as long as I will need it to be. I am just alerting others to a new (to me, at least) sneaky tactic by the oh-so-trustworthy banking industry to find a way to extort more money out of us! No doubt to pay more of their massive regulatory fines for PPI or Libor rate jacking. I appreciate the 0% deals, they are very useful when managed properly.

Let me get this straight.

You're upset that they've explained, in writing, that your variable interest rate credit card can have its rate varied when the Bank of England vary the base rate?

And that's "sneaky"?

moatmeister

I am sorry for wasting all your time it is obviously only me who thinks the banking system is weighted in its own favour I must be misguided. I am very sorry for being so naive.

boo_star

moatmeister wrote: »

I am sorry for wasting all your time it is obviously only me who thinks the banking system is weighted in its own favour I must be misguided. I am very sorry for being so naive.

It is but that's true of every sector, they're businesses and their intention is to make as much money as possible (whilst remaining within the law.)

British Gas, Tesco, BP, and every other company, they're not doing what they do for your benefit, it's for theirs.