Alliance & Leicester Massive interest rate increase

maddriver

Just had a letter from A&L today to tell me my card (run by MBNA) has had an interest rate increase to 2.5292% a month. By my calculations thats nearly 35% APR:eek:

Tried phoning them today but they're computer system is down and not likely to be working before Monday.

Worse still they're increasing the minimum payment from 2% to 5%, which is about double what I can actually afford to throw at this card.

Any ideas of the tack I take when I call Monday?

bigstevex

Hi, i got the same letter off mbna themselves, i have a platinum plus card.
Anyway here's my little story

I took it out in 2004 and gradually they have raised my limit upto 10'000.
I bought a house recently and so bought plenty of things on the card as my apr was only 6.9%, i normally pay about 700 off a month so its not a big problem having the amount of debt. Anyhow, when i originally took out the card i read some interesting things on the web about mbna drawing you in and they pushing up your interest rates, but i thought nothing of it and that it was just a few unlucky people.

So, all of a sudden i find myself with a balance of 8500 and a letter saying my rate is going from 6.9% upto 12.9% within 2 weeks!!!

I rang up at 9:01 this morning the second they opened. I kept calm and basically asked them how they can justify an 86% increase in my apr (not 86% apr, just an 86% increase in general).

They replied with some nonsense about reviewing cards every now and again and even with a 12.9% apr its a very competitive card. I responded with, thats not good enough, maybe 6 months notice would have been fine but not 2 weeks, "put me onto your manager please i'd like to make a complaint" was my next line. Anyway the manager was too busy to talk to me and i was told they would call me back within the hour. 5 minutes later the same lady phoned up, not the manager and said, please ignore the letter sir, we have changed your rate back to 6.9% and it will remain at this for the foreseeable future.

Yippe :beer:

Don't back down, just say you'll go elsewhere if they refuse or say you can't afford the new rate and you've been bullied into taking it effectively!

TAG

We had the same with Virgin. However, the letter we recieved re the new min 5% of balance is written in such double dutch I don't think anyone would be able to really understand what it means.

This is how it is actually written -

"The minimum payment that you must pay by the payment due date shown on your statement each month will be as follows:
- if the balance shown on your statement is £10 or less, it will be the total amount of the statement balance; or
- if the balance shown on your statement is more than £10, it will be which ever is the least of 5% of the statement balance or the total of any Payment Protection charges, interest, handling fees and default charges plus £5, provided that it will always be at least £10"

Anyway the long and the short of it is this month we have had to pay the months interest (£82.29 on a 7k balance) that was added plus £5. So £87.29 in total.

People see the 5% minimum and panic. We did, we thought our payments would go up to around £360.00 a month.

They wanted to put the APR up to 29.9% but DH phoned and was politley persistant. After 3 NO's he got them to hold it at 15.9% which was the standard rate when we got the card.

Hope that helps a bit.

maddriver

Just reread it, you're right I saw the 5% and missed the "least of" part.

Phew.

The 35%apr is still gonna hurt tho - will call Monday.

Thanks all

bigstevex

maddriver, don't accept the increase, make sure you refuse to accept it, just be polite but sound shocked and upset as its down to the person on the phone i think.

35% apr is 5 times what i'm getting off them so clearly there is plenty of room for movement!

maddriver

Just got off the phone, they put me on hold while they did a credit check, then came back and said no.

I pointed out that this increase makess it almost impossible for me to reduce the balance, so she went away to speak to the manager, and got a manager overide to 24.9%. Still high, but less than it was before the letter. Possibly I should have tried for more, but I was too glad the rate was going down not up!

As a by-the-by, opened my statement just before I called, there was a leaflet advertising secure loans. A cynical part of me wonders if thats connected to the rate rises MBNA seem to be putting through?

bigstevex

Thats odd, did they do a full credit check or just a 'follow up' type one that doesn't affect your history.

They didn't do that with me, maybe you don't spend enough on it for them to think your a 'valued customer'? I've spent ~£30K+ on mine this year

maddriver

I don't use this card at all. So much so that I didn't even realise the card had expired and I'd not been sent a new one!

The credit check was to "reactivate" the account, which the CS rep had to do to make a deal on the rate.

Not sure if the credit check will show on my credit report, but as I have zero searches reported in the last 12 months, that doesn't worry me too much.