Persistent debt on credit cards

PhilzMoney

New rules are being brought in whereby your minimum agreed payment on your credit card may no longer be sufficient. Basically, the amount you pay off on your credit card debt (averaged over a year) now needs to be greater than the interest charged. This means that the minimum payment that you agreed to when you applied for the card is now null and void.

I think this is totally unfair and in breach of the contract that you signed to get the card, so I'm starting a govt petition to have the rules reviewed. If any of you agree with me, could you say so please, as I need people to back the petition. If there is enough interest in this thread I will post the official link (if that's within MSE rules). Many thanks.

BoGoF

Old news, plenty of threads on here about it.

I, for one, won't be signing your petition.

You are free to reject the increase and stop using the card.

PhilzMoney

I did do a search before posting, but nothing came up. This is very different to an interest rate rise and is not as simple as rejecting it. Thanks for your comment anyway.

Nasqueron

PhilzMoney wrote: »

I did do a search before posting, but nothing came up. This is very different to an interest rate rise and is not as simple as rejecting it. Thanks for your comment anyway.

The persistent debt changes were done (indirectly) BY the government as part of their responsible lending process that lenders have to follow enforced through the FCA. Paying off the minimum and taking years to pay back the card while accumulating debt is daft, hence the increase so you pay back more capital and reduce your debt. It should be mandatory after a period of say 6 months of paying minimum while interest stacks up to save people from themselves.

A forum search for "Persistent debt" brings up 48 topics including 25 that are from the last year or so since the rules were announced including this main thread

stripeyfox

PhilzMoney wrote: »

New rules are being brought in whereby your minimum agreed payment on your credit card may no longer be sufficient. Basically, the amount you pay off on your credit card debt (averaged over a year) now needs to be greater than the interest charged. This means that the minimum payment that you agreed to when you applied for the card is now null and void.

I think this is totally unfair and in breach of the contract that you signed to get the card, so I'm starting a govt petition to have the rules reviewed. If any of you agree with me, could you say so please, as I need people to back the petition. If there is enough interest in this thread I will post the official link (if that's within MSE rules). Many thanks.

The rules are there, ultimately, to protect (or at least try to help) people who are maxed out on cards and only pay back the minimum (been there myself). I understand a sudden jump in monthly repayment may be a shock to people in this situation, but surely it has to be a good thing in the end. Everyone knows paying back only the minimum is bad and in this was the CC company can wring money out of you for years and years.

I doubt you'd get many people to support you. Even those who are deep in persistent debt would probably see that this is actually a good thing overall for them.

meer53

I think the new rules are a good idea. People bury their heads in the sand when only paying the minimum amount on credit cards. The new rules make them take action to get rid of their debt, people need to understand that if they spend the money they need to be sensible about how they pay it back, there seems to be a lack of knowledge about how credit works for some people, hopefully this will make more people aware. Credit cards are fantastic if used correctly.

I agree that the lenders must take some of the blame, offering ridiculous limits etc, but they weren't the ones who spent the money were they ?

EarthBoy

PhilzMoney wrote: »

New rules are being brought in whereby .... This means that the minimum payment that you agreed to when you applied for the card is now null and void.

I think this is totally unfair and in breach of the contract that you signed to get the card.

If you actually read the contract you signed up to, you'd have seen there was a clause allowing the bank to vary the terms and conditions if they give you notice. Therefore, there is no breach of contract.

TadleyBaggie

PhilzMoney wrote: »

I did do a search before posting, but nothing came up.

Try these:

https://www.moneysavingexpert.com/news/2018/02/new-credit-card-rules-to-help-those-in-persistent-debt/

https://forums.moneysavingexpert.com/discussion/5876832/barclaycard-changing-their-minimum-payments

https://forums.moneysavingexpert.com/discussion/5911006/repayment-advice-please

Ergates

PhilzMoney wrote: »

New rules are being brought in whereby your minimum agreed payment on your credit card may no longer be sufficient.

If by "being brought in" you mean "Introduced last year".

PhilzMoney wrote: »

Basically, the amount you pay off on your credit card debt (averaged over a year) now needs to be greater than the interest charged.

Not quite. It's the total amount your pay off your debt has to be greater than the total amount your paid in interest in charges, calculated over a period of 18 months

PhilzMoney wrote: »

This means that the minimum payment that you agreed to when you applied for the card is now null and void.

No it doesn't. It means that if you continue to pay the minimum amount for a period of >18 months then the bank will have to start sending you letters offering you help and advice. The bank may choose to avoid this situation by increasing your minimum payments, but that isn't a requirement of the regulation.

PhilzMoney wrote: »

I think this is totally unfair and in breach of the contract that you signed to get the card

It isn't in breach of the contract you signed, and I don't see how you could describe it as "unfair" as it will result in saving you money.

Dandytf

I very recently called Aqua about forced booster payments i.e. Their idea of additional payments above minimum payment.
Since removed at least temporarily for the time being at my tel request.
Though their letter did advise they have their own processes in place every few months when balance isn't cleared in full.
I meanwhile continue to save up via helptosave in desperate hope of making a high repayment maybe next year though if possible I don't want to loose 50% payments year two and four.
Though I'll pay as much possible to keep Aqua happy for the time being.