MBNA is killing me @ 29.9% pa

GSDMum

I need to get this sorted, after doing a deep analysis of 2018 home accounts, I've discovered I've paid £2700 in interest last year. The card amount for the year started off at £12,600, and it's ended at £9,090.

The card's used for fuel, food shopping, and similar things.

It's a struggle to get the amount down, and I feel I'm fighting a losing battle. We've had the card over 20+ years, and have never missed a beat with payments.

A loan from our bank isn't available, not because of any financial problem, but because of our lifestyle doesn't fit the bank's criteria. We've retired and are cruising the inland waterways on a narrowboat. We do have a postal address though for banks, pensions, NHS etc. Our narrowboat is fully owned by us, therefore we don't have any mortgage nor rental bills to pay, except of course Canal & River License.

If we phoned MBNA for help, would they hold this against us, and penalise our lifestyle even more?

Any advice would be gratefully received. :T

[Deleted User]

You could ask - they may agree to put you on an arrangement. Make sure you understand what this means in terms of your credit files before you go ahead.

You're unlikely to get further borrowing as you're struggling with what you have, but you could try an eligibility checker for BT cards.

Failing that, you'll need to pay if off the old fashioned way.

shortcrust

Don't lose sight of the fact that you've paid off a pretty big chunk of the debt in a year. If you can continue to repay a similar amount you'll have cleared it in not much over two years from now.

It doesn't sound like a losing battle to me.

molerat

Spend less and pay more off the debt
Get a 0% BT card
Get a new card for your usual spending and pay in full each statement.

BoGoF

If the card is being used for everday spending such as food then where is your pension money going then?

Terry_Towelling

So, the balance has come down over the year - and by quite a chunk - that's a positive and it indicates that your spending is not currently out of control and there is probably no systemic issue with your finances at present. In fact, you've reduced the debt by £3.6K despite your monthly spending requirements and MBNA lumping £2.8K of interest on top. That's impressive.

If nothing changes this year, the lower start balance will mean less interest applied and, if you are able to maintain the same high level of repayment (which will hopefully include all new spending, all interest and a higher percentage of the remaining balance than required) you should make even more progress and have the debt down below £5K.

I suspect you are not actually struggling to make the payments but you are upset by the apparent lack of progress reducing the debt due to the interest.

Clearly, you'd be better off if your payments went entirely towards reducing the debt rather than paying off interest but you'd need a very hefty BT offer from a card provider for that. Even then, the minimum payment calculation used by any 0% provider could initially push your payments even higher if they used a different minimum payment calculation to MBNA. That said, you'd have the debt cleared pretty quickly if there were less/no interest.

MBNA (like most card providers) do ask customers to get in touch if they are having problems repaying but, as ZX81 says you might first try to get hold of a 0% BT card for at least some of the debt.

Don't be disheartened, you are actually doing really well. As a matter of interest (just being nosey) what was it that caused the debt to get that high in the first place?

shortcrust

BoGoF wrote: »

If the card is being used for everday spending such as food then where is your pension money going then?

It's a good question.

Obviously your spending is less then your income, otherwise you wouldn't have been able to get the debt down over the past year. But you should stop using the card for everyday spending and use a debit card or cash instead. At the moment you're paying more interest than you need to by using it for everyday stuff.

gt94sss2

I suggest you post on the Debt-Free Wannabe Board.

It would be interesting to know how much new spending there was on the card in 2018.

Regardless, what I would suggest is:

a) posting a Statement of Affairs showing were your income/spending is going - you seem to have done this already yourself.

b) stop using the credit card for new spending. As you don't clear the balance in full, it means you are paying interest on every single purchase which is preventing your outstanding balance reducing much faster. (switch to a debit card instead)

The Debt Free Board will also be better placed to advise on the impact (on credit files etc) of contacting MBNA and asking for assistance

GSDMum

Well I've grasped the nettle to see where we can economise, all 2018 spends have been input into GNUCash for analysis.

So where's our money gone....
£
Groceries - 7814.04
Diesel - 904.74
Coal - 577.00
Mooring Fees 499.00
Gas - 147.45
Boat Maintenance - 2897.79
Clothing - 329.00
Mobiles/Internet - 921.22
Household - 771.33
Dog - 323.41
Boat License - 882.17
Insurance - 408.00
Entertainment - 771.33
Credit card Interest - 2700.00

There's a lot of places that I can economise now I see what's going on, and one of the places would be to reduce interests. I've had a shock how MBNA's interest has risen.

Financially we're managing well, but it is frustrating trying to get the credit card down to zero.

How did we manage to rack up the balance? Taking our 'eyes of the ball', having a new galley on the boat, adding solar panels....

Thank you for your input.... appreciate your advice.

Willing2Learn

It is quite impressive, the amount you have reduced the MBNA balance by, in just one year. Especially when you consider the APR. So give yourselves a pat on your back, as you have done well.


Have you considered a 0% Balance Transfer card? If you can get accepted for one, then that could dramatically speed up your repayments.

GSDMum

I don't think we could get another card because of our unusual lifestyle. We don't fit into the norms i.e having property, paying rent, etc.

Thinking about it, I think we've just got to plod on through.

THANK YOU VERY MUCH FOR ALL YOUR ENCOURAGEMENT!