Minimum Payment Hike

dazzaofdagenham

Deleted_User wrote: »

It certainly has the potential to. This is why lenders resisted the initial regulatory suggestions in 2010 that the min payments should be increased for the backbook, as payment shock would be too high.

However, over time, for those who do not default, their repayment behaviour will improve and their indebtedness will come down. Defaults are largely a result of bad habits.

Agreed...if repayment behaviour means paying less interest over time then the credit card will need to look elsewhere for there profits ?

Either way, minimum payments will only be going one way over the next few years, so it's something we'll all need to get used to.

I’m not really affected by this as I owe very little in terms of credit, maybe 600 pounds.

But the effect on others will maybe aff3xt us all

[Deleted User]

dazzaofdagenham wrote: »

But the effect on others will maybe aff3xt us all

Absolutely. The one cast iron guarantee in lending is that the good guys pay for the bad.

dazzaofdagenham

And I seem to read in recent terms and conditions change that interest rates on credit cards ( newday ) will be linked to Bank of England base rate.

And I!!!8217;m of the opinion that the base rate will be going up in the next fe years, coupled with this increase in min payments could push people over the edge....

Not something this economy needs

molerat

chattychappy wrote: »

As with previous regulatory changes, some CCs will take advantage by using them as an excuse to slip through changes that aren't actually required.

Under these new rules firms will be required to take a series of escalating steps to help customers who are making low repayments over a long period, beginning when the customer has been in persistent debt over 18 months. After this time firms need to contact customers prompting them to change their repayment and informing them their card may ultimately be suspended if they do not change their repayment pattern. Once a consumer has been in persistent debt for 36 months, their provider will have to offer them a way to repay their balance in a reasonable period.

Not really much leeway in what they can do is there. Simply asking pretty please can you pay this off quicker is not going to work with the majority. The same as is happening with smart meters, the customer declines and the supplier gets a fine for not doing enough. The banks are screwed whatever they do.

MEM62

mmm123 wrote: »

What would have been a £400 minimum repayment will now be £620!

mmm123 wrote: »

it is going to be hard for me to find this extra money every month

That suggests that, not only are you carrying a large amount of debt, but that your finances are also stretched. This is your wake up call. You need to look for ways to deal with this debt and reduce your level of borrowing before the slippery slope that you are on becomes unmanageable.

The DFW boards will give you some great advice. Pop over and stick an SOA up.

chattychappy

molerat wrote: »

Not really much leeway in what they can do is there. Simply asking pretty please can you pay this off quicker is not going to work with the majority. The same as is happening with smart meters, the customer declines and the supplier gets a fine for not doing enough. The banks are screwed whatever they do.

Yep, true (the last sentence).

My reading of the OP is that the minimum payment is being increased. Ie there will be fees and reports to CRAs if the new minimum is not paid. My reading of

molerat wrote: »

After this time firms need to contact customers prompting them to change their repayment and informing them their card may ultimately be suspended if they do not change their repayment pattern.

is that the requirement is to "prompt" them to change their repayments and threaten suspension if they don't. Also this is if the OP doesn't respond to earlier communication, hence "After this time.."

Before writing my post, I did skim the regs themselves, as the PR spun version can sometimes be lacking. They are here: https://www.handbook.fca.org.uk/handbook/CONC.pdf (at 6.7.27 onwards).

The gist is very much of communication, offering help, asking the borrower to increase payments over time.

I think we would need to see any other documentation that the OP has received before making a judgment, but it doesn't seem to me that the lender is compliant with the new regs on the basis of the OP or can be honest if they are saying the regs require them increase the minimum.

(I think compliance with the new regs isn't required until September.)

bigisi

OP's break in between their '2' posts - 11 years! They never came back to their last thread either. I suspect you're all wasting your time.

photome

OP hope you return and get things sorted, your last post was in 2007 , with similar question



as suggested post on the DFWB

Nasqueron

My CC is with the Halifax and I received a letter yesterday saying they were changing the Ts & Cs to allow them to recommend you increase the minimum if they feel you aren't paying it off / paying more in interest than clearing debt. I think I will probably close it as the "loyalty bonus" which used to be 0.25% cashback I now see they round down to the nearest £5

Ergates

The gist is very much of communication, offering help, asking the borrower to increase payments over time.

Pretty much this. Monitor your customers, looking for those falling into the definition of persistent debt. If/When you find them, contact them, offer help, ask them to increase their payments and point them to some independent advisory bodies. The "stick" if one is needed is that if you don't change your repayments then they may stop your card (at the 36 month mark if you're still in PD, or sooner).

It's not looking for people only making the minimum payments, it's checking that over the previous 18 months, do the sum total of fees, charges and interest make up more than 50% of the sum total of payments (over the same period). The other criteria is that your balance has to have been above £200 for the entire period too.

So with customers paying less interest per year......where will they earn all there profits

That's not really the FCA's problem...