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Credit Card Balances going up?

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Hello,
I need everyones opinion and will try to make it short and to the point.
I have an MBNA card with three different APRs:
A. £500 @ 19%,
B. £200 17%
C. £100 @ 4%

When a payment is made each month it naturally goes toward the highest APR. Also on my payment I am charged the interest of the balance of A, B and C values relative to the amount owed.

So each month while the £500 is paid off and gets lower, the £200 & £100 is getting higher each month as there is no payment applied as it is going to the £500 even though part of the payment is the interest of all three.
Am I right that the balance of £200 & £100 shouldnt be going up?

Of course I havent given you the right values, but becuase of this my balances have risen by £1000 in the past year.

I have phoned MBNA to complain as I dont think this if fair.

Am I wrong as the boy at MBNA basically told me Im an idiot but still raised the complaint.

Comments

  • YorkshireBoy
    YorkshireBoy Posts: 31,541 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    The 'rules' say the minimum payment has to at least cover the interest that HAS been charged over the last month...not the interest that IS TO BE charged over the following month.

    The answer, unsurprisingly, is to pay sooner (following statement production), or to pay more (on the date you're paying now)...ideally both!

    Time to either cut back elsewhere, go out and earn more, or switch the balance to a 0% BT card.
  • Forndog
    Forndog Posts: 9 Forumite
    Thanks for the reply. I do have a plan and hopefully will be debt free soon but my problem is the whole payment I make each month goes to the highest APR therefore the balance of the two APR is going up as they payment isn't applied.
    Part of this payment is a charge from the interest from the lower balances. I doesn't seem fair.
  • YorkshireBoy
    YorkshireBoy Posts: 31,541 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Forndog wrote: »
    Thanks for the reply. I do have a plan and hopefully will be debt free soon but my problem is the whole payment I make each month goes to the highest APR therefore the balance of the two APR is going up as they payment isn't applied.
    Part of this payment is a charge from the interest from the lower balances. I doesn't seem fair.
    So you'd rather pay down a low interest balance before, or as well as, a high interest balance? You sure? Really sure?


    You should know that your T&Cs with regard to allocation of payments are a whole lot fairer than they were a few years ago...when all your payments went towards the lowest interest bearing balances, meaning the interest added each month increased massively! Coupled with stupidly low contractual minimum payments, it escalated debt considerably...unless you were disciplined enough to pay much more than the very low contractual minimum payment required.
  • jonesMUFCforever
    jonesMUFCforever Posts: 28,898 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    It's only £800 can you not get a balance transfer card and pay it all off?
  • Forndog
    Forndog Posts: 9 Forumite
    I have been approved for an interest free card and will pay this off in time.
  • Forndog
    Forndog Posts: 9 Forumite
    So you'd rather pay down a low interest balance before, or as well as, a high interest balance? You sure? Really sure?


    You should know that your T&Cs with regard to allocation of payments are a whole lot fairer than they were a few years ago...when all your payments went towards the lowest interest bearing balances, meaning the interest added each month increased massively! Coupled with stupidly low contractual minimum payments, it escalated debt considerably...unless you were disciplined enough to pay much more than the very low contractual minimum payment required.

    I'm not sure I have explained this correctly. I have read the T&Cs and yes the highest APR should Be paid first. But because there is no payment against the lowest APR's the principal amount is rising and gets higher each month though I'm paying the insterest on these balances. My problem is the principle amount on the lower APR should not go up.
  • YorkshireBoy
    YorkshireBoy Posts: 31,541 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Forndog wrote: »
    I'm not sure I have explained this correctly. I have read the T&Cs and yes the highest APR should Be paid first. But because there is no payment against the lowest APR's the principal amount is rising and gets higher each month though I'm paying the insterest on these balances. My problem is the principle amount on the lower APR should not go up.
    So you think the current arrangement is unfair. If you could change things, what do you propose would be a better arrangement?
  • Forndog
    Forndog Posts: 9 Forumite
    So you think the current arrangement is unfair. If you could change things, what do you propose would be a better arrangement?

    I'm not going to play your game. My bad for my first post on here trying to get help on here . Consider this closed.
  • YorkshireBoy
    YorkshireBoy Posts: 31,541 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Forndog wrote: »
    I'm not going to play your game. My bad for my first post on here trying to get help on here . Consider this closed.
    I thought I heard a penny drop. ;)
This discussion has been closed.
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