Marbles BIG Interest Rate Increases On The Way...

Candyapple

quackers82 wrote: »

Since when has carrying a balance on a credit card not been responsible? Its their main purpose! borrowing over a short period of time, ie a holiday and paying it back over a couple of months. Loans for borrowing over a long period of time.

They have other purposes such as emergencies , which again might need to be paid back over a few months depending on the cost, short term borrowing and carrying a balance!

Some use them for everything than pay back in full, or use it for rewards which is fine, but don't go saying its irresponsible to carry a balance on a product designed for carrying a balance short term.

Did you even read my post? You seemed to highlight it, but not actually read the part it refers to.

Candyapple wrote: »

The issue is with subprime cards such as these, you should not be holding a balance on them........ever. The whole point of them is to rebuild your credit history. As in using them responsibly - buy something and then pay it off as soon as that statement has been produced.

If you put a holiday on a credit card and pay it back over a few months, then as long as you are happy paying a substantial amount of money in interest every month, no one is stopping you. What you find is people who do this, often can't afford the holiday in the first place and putting it on a card is just a house of cards situation waiting to happen before they start spending what they haven't got and then if they happen to lose their job......the DFW forum is littered with examples.

You certainly wouldn't put a holiday on a subprime card and not clear the balance the next month if you had an ounce of financial sense. If you knew that that £800 holiday would eventually cost you £2k, would you have put it on the card in the first place?

My point was that people who use credit responsibly would either put a holiday on a 0% card and spread payments over the term, or pay for it on a rewards card to gain points or cash and then clear the balance the same month. They wouldn't do the same with a subprime card, which is what the OP has.

I understand that people have emergencies, but really and truly are these actual emergencies or a case of poor budgeting? Christmas comes every year, yet so many people still put their spends on cards and are broke over January. If your washing machine broke down, do you actually need a new one or can you make do using the launderette or getting one from Freecycle? Yes a credit card is most handy in those instances, but again, you would have to be mad or very poor at budgeting if you carry a large balance on a subprime card and not try and do everything in your power to clear it ASAP.

[Deleted User]

David555 wrote: »

Am I missing something? If the OP could pay it off in full I'm sure he/she would! Not everyone is rich and in a position to do so with the cost of living ever increasing at a alarming rate. What arrogant replies. Why don't you pay off your mortgages in full today instead of paying interest? (If you have mortgages of course)

Back to the original post. It's all about profits sadly, they can see you're a profitable customer by not clearing in full so basically taking advantage by upping the interest you pay. Depending on how long you've had the card you might be able to get a more main stream card elsewhere. Check here https://www.moneysavingexpert.com/eligibility/credit-cards/

If you aren't quite there consider getting a Aqua advance card that lowers your interest by 5% every year for 3 years until it's at a more reasonable 19ish%

Why are you comparing a potential 6 or 7 digit mortgage figure to 4 figure credit card limit?

Chrysalis

I wont join in the mocking of the OP, he/she is just passing on information to share.

I also respect not everyone can get credit on optimal terms, so some people will get a subprime card and use it as is for their own needs, we should respect that I think.

To candy.

Lets say I have £500 spare over the next 3 months.

I have something to pay out that costs say £1400.

A card provides the cashflow, you put it on the card, pay it off the next 3 months, and its all good.

I would not call that situation paying for something you cannot afford.

Business's as an example borrow money all the time to provide cashflow.

Also 3 months of 30% apr would only yield £105 interest unless I have made a mistake in the maths, £105 to borrow £1400 not a huge issue.

Candyapple

Chrysalis wrote: »

I wont join in the mocking of the OP, he/she is just passing on information to share.

I also respect not everyone can get credit on optimal terms, so some people will get a subprime card and use it as is for their own needs, we should respect that I think.

To candy.

Lets say I have £500 spare over the next 3 months.

I have something to pay out that costs say £1400.

A card provides the cashflow, you put it on the card, pay it off the next 3 months, and its all good.

I would not call that situation paying for something you cannot afford.

Business's as an example borrow money all the time to provide cashflow.

Also 3 months of 30% apr would only yield £105 interest unless I have made a mistake in the maths, £105 to borrow £1400 not a huge issue.

I’m not mocking the OP, just clearing up a few issues that someone didn’t seem to grasp about subprime cards.

I’m assuming in your scenario that you had a poor credit history so a 0% card would not be an option, otherwise I’d advise you to see if you could get a 0% purchases one, or failing that a 0% balance transfer card or to see if you could get an overdraft with your bank as this would be cheaper.

My answer to your question would be:

1. Do you really need this thing right now if you can save and pay for it outright in 3 months time?
2. Can you work overtime/get a second job/sell something to pay for it instead?
3. What would happen if within the next 3 months something else ‘unexpected’ or another ‘emergency’ occurred that required your spare money you had allocated for the credit card debt? That 3 month deadline you set for yourself then turns into 6 months as you have to clear that other debt on top of it. What if within those 6 months you lose your job or your partner is pregnant. Those intentions of paying off the debt get put to the back burner as you are ‘just about ok’ paying off the minimum repayment, see where I’m going with this? It’s easy to accumulate debt.
4. If you are certain that nothing untoward is going to happen in those 3 months and you are happy to pay the additional interest - like I said before - go ahead! Although I don’t understand why, if that £1400 ended up costing you an extra £70-100 in 3 months interest, why would you be so complacent with your money? If someone asked you to withdraw £100 from an ATM right now and asked you to burn it, would you be so willing to oblige?

When used correctly, a credit card is an invaluable tool. You can make money from them, earn rewards for using them, and get perks such as section 75 protection. These are the benefits of having a good credit history and being able to choose from the mainstream market.

Those who fall outside this remit are open to the subprime market. This market serves a purpose, if used correctly, for those customers to regain access to the mainstream market by using the card to make their everyday purchases or even just using it solely for say food shopping or petrol and then clearing it monthly with the money they would have normally used to pay for these things. To use these cards for anything other than credit building is asking for trouble.

A business borrowing money is a completely different kettle of fish. That’s like comparing apples and oranges.

dazzaofdagenham

Deleted_User wrote: »

The card rates aren't linked to BoE rates. They're linked to customer risk.

No doubt...

But who deserves interest rates about 30% ?????
Isn’t this just tempting people into debt ?

[Deleted User]

People whose risk profiles justify it.

Higher rates should never tempt someone into debt, unless they are clinically insane.

dazzaofdagenham

Deleted_User wrote: »

People whose risk profiles justify it.

Higher rates should never tempt Simone into debt, unless they are clinically insane.

Higher rates don’t tempt people into debt...it gets them into debt.

If a customer is perceived to be a risk then why not reduce the available credit to them as a way of controlling said risk.

How does increasing the interest rate control that risk.

[Deleted User]

Because it spreads the risk return across the cohort.

You know that a certain % of any given cohort will default but you don't know who. Therefore you have to price accordingly across the cohort.

SuperAllyB

Ebe_Scrooge wrote: »

And your question is ...... ?

Credit Card issuers can vary their interest rates at any time, subject to the statutory notice period. If you don't like the new T&C's switch to another card ?

You say in your OP : "The only other option is to cancel the account before the 15th April and will be charged at the exisiting rate of interest until the paid off." So if you have the funds to pay off the balance, why haven't you done so ? You can't cancel a card whilst there is an outstanding balance on it.

If a credit card company increases the interest rate then you always have the option to refuse the increase and close the account to new spending. You still have the same rights to pay however you see fit as long as you meet the minimum payment requirements.

Johnch1959

Same thing happened to me, sent me a letter saying it was increasing to 39.94% then 6 months later sent me another letter saying it was gong up to 44.93%, luckily I didn't have a massive balance and paid it off before closing the account