Barclaycard refuses to explain why i don't qualify for rate reduction

inpursuitoffreedom

I read last week how members of this forum have reduced their barclaycard interest rate to 9%.

Our debts have mounted up, whilst i don't deny some expenses could have been avoided, in the main this is due to a situation out of our control.

Regardless, my issue is I rang Barclaycard and asked for a period of rate reduction. They refused and couldn't explain to me why I was refused when others get the reduction.

I then wrote to them and have just had a call to explain they still refuse, but again will not explain why they refused - instead i just got told 'i've tried everything i could'.

I'm now waiting for a call back from a manager, who i expect will again refuse to tell me the rules behind who gets a rate reduction and who doesn't.

I don't mind if i don't qualify, but the frustration at being told 'sorry no' and no explanation stinks.

Can someone explain to me how Barclaycard can get away with not sharing their decision making process for rate reduction? Surely this should be fair and transparent?

I just get the impression they know I'm stuck and like vultures they squeeze me for as much as they can get until i find a way to escape. I paid £1000 off a card last month and a further £300 off another, I then got an over the credit fee because they didn't make clear that the minimum payment (£300) wouldn't cover all the interest.

Please can someone help me, I'm truly devastated I can't find a way to move forward without being further penalised.

[Deleted User]

Their lending and risk criteria is confidential and I wouldn't expect them to share anything beyond very general criteria.

But carrying a high balance, as well as being so close to your limit, will put you into the higher risk category, hence being less likely to get a rate reduction.

inpursuitoffreedom

So I can only imagine I am classed as a higher risk if they were to reduce my rate than I am now? Why?

I'm not looking for access to more credit - I am happy to lock the card so only payments can be made to pay off the balance. I accept this doesn't make them money, but it does reduce their debt risk as I'm paying down a historical debt.

My main point is though - regardless of being told the risk criteria, there should be a public criteria to which rate reductions are considered and allow customers to clearly understand this. Instead I got my hopes up and now feel unfairly treated and confused as to why I am being refused. Surely it's only fair to at least disclose some sort of reason behind the decision? Any information is better than 'we tried' but no.

[Deleted User]

inpursuitoffreedom wrote: »

So I can only imagine I am classed as a higher risk if they were to reduce my rate than I am now?

No. It means if they reduce your rate, the risk stays the same but their loss goes up, as it's insufficiently covered by the interest.

Pricing is done in customer segments. They can be fairly certain that for every 100 customers in a given category, x% of them will default. The higher rate default customers need a higher interest rate to cover the greater costs.

inpursuitoffreedom

So who would qualify for a rate reduction? Those that are classed as low risk?

I get the economics of it, but rate reduction should be for those in need surely?

However i repeat my main point - They have refused to share any reason for why I don't qualify. Whilst I don't like the view that those in need are most likely to be refused, at least there's some sort of logic behind this.

I know these systems are designed with lots of data behind them so I'm sure they are accurate on default rates, but how many people like me are forced into years and years of treading water? I won't walk away from my debts, I will find a way to pay them off. Whilst my circumstances were not all my fault for this situation I realise I accepted getting into bed with these guys, but it kills me how much they truly squeeze you when you're an honest, genuine case. I know some don't care, have lots of great holidays they can't afford, but for some debt/credit is the only way to survive when situations turn against you. These people shouldn't be treated this way where debts can't be reduced as banks have locked you into a situation you can get on top of because you appear to be high risk.

Work with us to get your money back and our lives back. Surely there is a better way for cases like this?

Again, though my point is banks should have an obligation to be informative on their decision making - otherwise this leads to mistrust or abuse of power. I get commercially there is some sensitivities here to allow them to compete, but i know there must be a way to get round this or better still they should be forced to follow the same rules for cases where there is genuine reasons for situations getting out of control.

Like i've said above I don't want more credit, I will pay off what I owe and I'm not seeking years of rate reduction - anything would help me and more to the point others like me.

It truly worries me how many others feel so screwed over. There should be a better way.

[Deleted User]

Yes - lower risk gets lower rates.

I take your point about people with debt fall into both 'good' and 'bad' categories, but accounts aren't micro managed to that extent. And customers as a whole, aren't prepared to pay for them to be managed like that.

I know you're frustrated about lack of transparency - but the commercial confidentialities over ride that. It's policed to an extent by the FCA and FOS - they will and do challenge companies to justify rates to groups of customers, as it needs to be risk based. But those reasons won't make it into the public domain.

Aside from that - is there any way you can restructure your debt? Lower rate cards? Loans? Overpayments?

inpursuitoffreedom

Understand it's a challenge to workout 'good' and 'bad' debt at that scale, but I believe saying it's a challenge doesn't mean it shouldn't be done. It sounds to me like banks know that if they did something about it they would make less from fees on those 'good debts' and more to the point i should only pay for the costs associated with my debts not others?!

I assume 'good' debts in the higher risk category pay for the 'bad' debts? How is this fair?

If 'good' debts want to do the right thing and pay off what they owe, surely banks should be designed to support this, not prevent it?

I dread to think what it does to those who like me end up in this bucket out of external factors not greed and extravagance. I'm coping, because I have two young kids who I owe it to and want to protect their future, without them I don't know what I would have done.

Anyway, my intention is not to drag this down into my personal circumstances but to seek to change the way banks handle cases like this.

I really don't buy the fact they can't be more transparent in this process. They are truly acting like loan sharks. Hike the rate, pay debts down, but then hike them up again and then when you try to pay it off faster they make it harder work?!?

How do people get out of this nightmare if they are kept locked in high rates? I understand if you've had bad debt in the past but as far as I know it credit card companies make their money when you're in a bad situation, so surely all of their systems are designed to optimise this. Is this ethical? Is this fair?

[Deleted User]

inpursuitoffreedom wrote: »

I assume 'good' debts in the higher risk category pay for the 'bad' debts? How is this fair?

That, unfortunately, has always been the case with credit. The good guys pay for the bad. Because, simply put, the bad guys don't pay.

Until there's a way of 100% determining who won't pay at the time of application (and therefore not accepting them), that's how it will always be. The looser the acceptance criteria (eg sub prime) the higher the rates need to be.

inpursuitoffreedom

What would you advise I do then? If I'm forced to be kept in this position paying the costs of my debt and others at the highest rate.

I can't get cards elsewhere because of this situation. Instead the bank is forcing me to pay these ridiculously high rates.

[Deleted User]

If you can't get any other credit options, then you need to pay as much towards the debt as you can to get it cleared. Which in practice, means either increasing your income or reducing your expenditure to free up cash. The DFW board on this site is very good with the latter.

The other option, if you really can't pay, is to default on the debt. You'll then likely be able to go onto a payment plan, with a reduction or freezing of interest. Financially, this will relieve the pressure, but obviously have a long term impact on your credit file. Only you can know whether this is something worth doing.

If things really are that bad, see someone like Stepchange for advice on your options before you make a decision.

Good luck with whatever you do.

eskbanker

inpursuitoffreedom wrote: »

They are truly acting like loan sharks. Hike the rate, pay debts down, but then hike them up again and then when you try to pay it off faster they make it harder work?!?

If they've increased your rate at least twice then each time they should have given you the option of freezing the account, i.e. keeping the rate you signed up to but not having access to any further credit, did they not do this?