Persistent Debt new Credit Card Rules

[Deleted User]

Because the FCA and FSA have long had concerns that people aren't paying off their balances fast enough.

This is just another step in a journey that began around 10 years ago. In a few years, expect all minimum payments to be higher than they are now.

AngiBear

Deleted_User wrote: »

Because the FCA and FSA have long had concerns that people aren't paying off their balances fast enough.

This is just another step in a journey that began around 10 years ago. In a few years, expect all minimum payments to be higher than they are now.

I think it is very scary and I think a lot of people will panic more and it will not be beneficial to a lot of people's mental health.
I am an absolute eejit though, I paid my credit card then the DD has came off now too. I phoned my CC company when I realised as I read they can think its money laundering and they said that is the new way its done.

[Deleted User]

They won't think it's money laundering.

You can either spend the balance off over time or ask them to send it you, if a large amount and you need it.

SRod

Deleted_User wrote: »

I imagine the agent must have fallen off their chair when you asked that!

Yes, because, as I said they're not there to help. They can offer 0% to new customers for transfer balances, but not to someone who has been with them 10+ years.

[Deleted User]

You can't BT within the same stable, so they can't offer you a BT.

You need to go elsewhere, and they won't help you with applying for a competitor card.

Ergates

SRod wrote: »

I actually think these rules are being brought in because they think the economy is going to tank again soon, and they are recovering as much as they can. It certainly is not to do with helping people in debt. If it was they would accept my offer.

No. These rules aren't being brought in by the banks, they're being forced on the banks by the FCA They will cost the banks millions of pounds to implement, will cost them millions more in the profits the banks make from credit card debt and mean the banks *have* the send out letters they know will annoy their customers.

Ergates

AngiBear wrote: »

Yeah, I get why this was introduced and that people know that making the more than the monthly payment will decrease their balance but why are they introducing it then?

The FCA (not the banks) is bringing these rules it because paying off credit card debt at the minimum is keeping people in debt for years (decades) and costing them thousands and thousands of pounds.

See here: https://www.moneysavingexpert.com/credit-cards/minimum-repayments-credit-card/#dangerous

Paying off a £3000 balance on a card at the minimum could take 27 years and cost £4000 in interest.

Increasing the monthly payment *just a little bit* can have a massive impact on this. For instance, in the example above, simply keeping the monthly payment fixed at the 1st months minimum (i.e. not reducing it every month as the balance goes down) could knock off 22 years of debt and £2,400 in interest.

*That* is why the FCA introduced these rules.

Anthorn

Ergates wrote: »

The FCA (not the banks) is bringing these rules it because paying off credit card debt at the minimum is keeping people in debt for years (decades) and costing them thousands and thousands of pounds.

See here: https://www.moneysavingexpert.com/credit-cards/minimum-repayments-credit-card/#dangerous

Paying off a £3000 balance on a card at the minimum could take 27 years and cost £4000 in interest.

Increasing the monthly payment *just a little bit* can have a massive impact on this. For instance, in the example above, simply keeping the monthly payment fixed at the 1st months minimum (i.e. not reducing it every month as the balance goes down) could knock off 22 years of debt and £2,400 in interest.

*That* is why the FCA introduced these rules.

But we could argue that it has nothing at all to do with the F.C.A. and is yet another useless rule instituted by the nanny state which doesn't have the mental capacity to consider the repercussions of its actions. In fact the new rule could spell disaster for those who were quite happily paying the minimum and the interest and those people may well now be forced into financial difficulty and may in turn be refused credit in the future because they are now financial untouchables!

Ergates

Anthorn wrote: »

But we could argue that it has nothing at all to do with the F.C.A..... blah

You could argue that I suppose, but you would be wrong. These rules do come from the FCA - that isn't really up for debate.

Anthorn

Ergates wrote: »

You could argue that I suppose, but you would be wrong. These rules do come from the FCA - that isn't really up for debate.

You edited the quote of my post: I didn't say "blah". Your reply is not even related to my post nor this thread topic.

Let's consider the problem further: Most people will be aware that if they pay more they can pay off the debt quicker and save on interest and that especially applies to anyone with credit card debt who is accessing M.S.E. So telling them about paying more is rather stating the obvious. So those who are only paying the minimum do so because they cannot afford to pay more. Therefore they are forced to pay more and are therefore placed into financial difficulty and hardship which wouldn't happen if they could still pay only the minimum.

The only light at the end of the tunnel is that lenders will be forced to help those who cannot afford to pay more even to the point of writing off the debt. But we do not yet know the effect on our credit history of that happening or the pressure upon borrowers that will be applied by lenders before they reach that point. I should think at the very least that "final solution" will involve a personal financial statement of income and expenditure.