MBNA and Interest Hikes - more...

rngDeadEye_2

I know there is already a thread mentioning this, but I wanted to add a little more detail.

I have over the alst couple of months began to take control of my debt. This includes an MBNA Platinum credit card to which I balance transfered £10,000 about 2 years ago.

It has been costing £150 and the balance as of today is £9,940 :eek: :eek: :eek:

In August my payments went up to £200 and this month £250 :eek: :eek: :eek:

I rang them to find out what is going on and they have ..... wait for it ..... increased my rate from ..... get ready for this ..... :eek: 24% :eek: to ... hold your breath :eek: :eek: 34% :eek: :eek: .

Not only this, and this is the important bit, they have retorspectively included my existing 2 year old balance in the new rate.

Is this even legal??? I know they can change the interest rate when they like, but can they do this on existing balances? Even Egg didn't do this when they upped by rate 6 months ago.

Advice really appreciated.

CLAPTON

yes they can change the rate whenever they like although they should give one months notice.

the new rate usually applies to the current balance no matter how long ago the balance was acquired.

can you apply for a lower APR card and transfer the balance across.. maybe a low LOB card might suit if your credit rating is good.

rngDeadEye_2

CLAPTON wrote: »

yes they can change the rate whenever they like although they should give one months notice.

the new rate usually applies to the current balance no matter how long ago the balance was acquired.

can you apply for a lower APR card and transfer the balance across.. maybe a low LOB card might suit if your credit rating is good.

I have already arranged this with Sainsbury's and M&S - both with 5.9 LOB.

I just wanted to know if it really was legal for them to back date the interest.

Thanks.

rngDeadEye_2

Just to add insult to injury, I have just spoken to MBNA yet again and they categorically CANNOT tell me why my interest rate is so high in the first place and the only reason the they suspect my increase was so high is that I had a late payment in December last year due to I suspect a current account change!

YorkshireBoy

rngDeadEye wrote: »

I have already arranged this with Sainsbury's and M&S - both with 5.9 LOB.

Assuming an equal split across both cards, your monthly payments will still be around £223 or so (avg 2.25%). At least you'll be paying more off the balance though.

I just wanted to know if it really was legal for them to back date the interest.

Credit card providers don't operate illegally. They have priced for risk in setting your interest rate, and because you've probably only been paying the "interest + £5" they see you as struggling. Condition 2d of your T&C's explains that they charge interest from the date the transaction was applied until the date you clear the balance...

2d We will charge interest on handling fees, and on interest you already owe, at the rate which applies to the relevant transaction. We will always charge interest on any annual fee, service charges and default charges at the rate which applies to card purchases. We will not charge interest on the card purchases shown on your statement if you pay off the whole balance shown on that statement, and on the statement before, by the date the payment is due. Otherwise, we will charge interest on all transactions, handling fees, service charges, default charges and interest starting on the transaction date and ending on the date you pay the bill in full. We work out interest each day, so the earlier you make a payment, the less interest you will have to pay.

rngDeadEye_2

YorkshireBoy wrote: »

Assuming an equal split across both cards, your monthly payments will still be around £223 or so (avg 2.25%). At least you'll be paying more off the balance though.Credit card providers don't operate illegally. They have priced for risk in setting your interest rate, and because you've probably only been paying the "interest + £5" they see you as struggling. Condition 2d of your T&C's explains that they charge interest from the date the transaction was applied until the date you clear the balance...

Unless I am mistaken (not unlikely of course) T&C 2d states that interest will be charged at the rate relevant to the transaction. I take this to mean either:

a) the rate as at the date the purchase was made
b) the type of transaction (cash, purchase, BTx).

Maybe CC co's are not being illigal, but are they being immoral? Lets face it, I made purchases two years ago at 15.9% - I am now paying 34%. Had I known this would happen - I wouldn't have used it!

As you say, the balance will be paid off earlier. It's as much my fault for ignoring what was going on with this card.

jamalfatty

rngDeadEye wrote: »

Unless I am mistaken (not unlikely of course) T&C 2d states that interest will be charged at the rate relevant to the transaction. I take this to mean either:

a) the rate as at the date the purchase was made
b) the type of transaction (cash, purchase, BTx).

Maybe CC co's are not being illigal, but are they being immoral? Lets face it, I made purchases two years ago at 15.9% - I am now paying 34%. Had I known this would happen - I wouldn't have used it!

As you say, the balance will be paid off earlier. It's as much my fault for ignoring what was going on with this card.

Did you read on to 2g?

2g In working out the APR we have not taken account of any changes in interest rates or handling fees or any annual fee. We may change these, and may also introduce new fees, by giving you notice under paragraph 11a.

When you took out a variable rate credit card, you should have been aware that it is exactly that, and if not prepared to pay any increase in the APR then shouldnt have borrowed money or at least had the means to pay it back in full whenever neccesary.

Its subjective but dont think its immoral and certainly not illegal, it's just simply how credit cards work