Can they raise 0% interest CC deals under exceptional circumstances?

ClarkeKent

There are many long 0% credit card deals for up to 3 years now.

If there was ever a financial crisis/hyperinflation/economic disaster. Can the credit card companies raise interest rates on the fixed 0% deals?

In other words, what are the exceptional circumstances on 0% credit card deals where the banks can break the 0% agreement?

jonesMUFCforever

You failing to make the minimum repayment on time will make them take it away.

chattychappy

ClarkeKent wrote: »

If there was ever a financial crisis/hyperinflation/economic disaster. Can the credit card companies raise interest rates on the fixed 0% deals?

A deal's a deal.

In the kinds of disaster you talk of, it's always open to the government to pass special legislation or a regulator to impose new regulations which could end or vary the deal. (Typically they put something into the T+Cs saying they reserve the right to vary things in these circumstances, but even if they don't, new laws can still change things.)

planteria

as jones says though, the only time i would expect a change to the deal is if a cardholder doesn't adhere to the agreement.

eddddy

chattychappy wrote: »

A deal's a deal.

In the kinds of disaster you talk of, it's always open to the government to pass special legislation or a regulator to impose new regulations which could end or vary the deal. (Typically they put something into the T+Cs saying they reserve the right to vary things in these circumstances, but even if they don't, new laws can still change things.)

.... and the banks do sometimes exercise their rights to vary things in unforeseen circumstances.

For example, many banks and building societies sold tracker mortgages when the BoE base rate was high, and never expecting that it could drop to 0.5%. They are now relying on 'obscure' clauses in their contracts to put up their rates:

Bank of Ireland: https://www.ennessprivate.co.uk/are-lenders-set-to-renege-on-their-base-rate-tracker-promises/
West Bromwich BS: http://www.thisismoney.co.uk/money/mortgageshome/article-2938633/Landlords-lose-court-fight-against-West-Bromwich-BS-tracker-mortgage-rate-rise.html

So check the T&Cs of the CC in question. Even if the T&Cs don't allow them to increase interest rates, do they allow them to decrease credit limits? e.g. from £5000 at 0% to £50 at 0%.

ClarkeKent

Wow, that is pretty mad about base rate tracker increase, we got our mortgage with Woolwich for 0.17+ base rate. The mortgage broker who was leaving-said to us, look off the record, this is a cracking deal that will be pulled soon. She was right! Hope Woolwich don't join that increase brigade!

So I suppose under extreme circumstances, they can break 0% deals or cut credit card limits when needed.

Thrugelmir

ClarkeKent wrote: »

If there was ever a financial crisis/hyperinflation/economic disaster.

Banks undergo balance sheet stress testing on a regular basis by the BOE and the PRA to ensure that they can withstand "shocks". The pass rate for the stress tests has and will continued to be raised. The lessons of the 2007/8 GFC have been taken on board. Takes to time to unwind positions previously held.

ClarkeKent

For example, were interest rates suddenly start to go mad. 10%/15% due to exceptional circumstances.

Could they break 0% deals?

guesswho2000

ClarkeKent wrote: »

For example, were interest rates suddenly start to go mad. 10%/15% due to exceptional circumstances.

Could they break 0% deals?

The terms of the 0% are that its a fixed rate unless the T&Cs are broken, such as the holder missing or being late with a payment, going over limit, etc.

They'd find it very difficult to raise it during the 0% period (and no doubt an ombudsman complaint would be justified in such circumstances), but they could, of course, increase the standard rate to 100% (or whatever they like), which any balance remaining at the end of the 0% would then revert to.