Changing Interest Rates and what can I do?

CMB93

My credit card company wrote to me last week to say that my interest rates will be increasing from 36.980% to 41.184%.

This is an aqua card that I originally got to improve my credit score, and for a while it worked. But then when my boyfriend had a terrible accident and wasn't able to work for 6 months, I needed to use it to cover some essentials.

I called Aqua and explained this to them (first of me using the account in such a way) and asked if they could keep my current interest rate, which is still high, for the next 6 months to give me a chance to put as much money as i could back in. They said they couldn't as I could make the minimum payments and then some that I'm not classed as in financial difficulty.

They then offered to close my account which would allow me to pay off my card at my current interest rate until it was settled. I no longer use the card (it's in my sock drawer) so not having it wouldn't bother me. It would allow me to pay it off 4 months faster (and with a high payment amount, that would be extremely welcome!).

However they were unable to say if this would count as a default or if it would negatively effect my credit file in anyway.

We're looking to re-mortgage to another fixed rate deal at the start of next year so I won't risk any negative impact on my file.

Would closing the account have any negative impact on my account?

Thanks in advance!

BoGoF

It would not count as a default.

Can you not get a 0% card to do a balance transfer?

CMB93

Thank you! Would it have a negative note next to it though?

I wouldn't be able to get a card with the amount needed to close, and don't want to open a new account as we're within 6 months of remortgaging.

[Deleted User]

The account will simply show as closed. There's no commentary.

BoGoF

No.....no negative effect. You are entitled to reject the increase.

On the remortgage front, the fact you have had to resort to a sub prime card suggests your credit history isn't great?

molerat

CMB93 wrote: »

My credit card company wrote to me last week to say that my interest rates will be increasing from 36.980% to 41.184%.

And in that letter they would have explained your options one of which is to refuse the increase and continue paying off at the current interest rate but with no further ability to use the card. No explaining necessary, it is your right in law. This will have no effect on your file whatsoever.

CMB93

BoGoF wrote: »

No.....no negative effect. You are entitled to reject the increase.

On the remortgage front, the fact you have had to resort to a sub prime card suggests your credit history isn't great?

It's not the best, but it's building and everything is in order.

I have a few defaults from five and a bit years ago, but managed to get a mortgage in 2018 with these on. By the time re-mortgage comes around they will be off, credit utilisation below 30%, no searches for 8+ months, no late/missed payments.

A_A_Mole

CMB93 wrote: »

They said they couldn't as I could make the minimum payments and then some that I'm not classed as in financial difficulty.

How did they know you could "make the minimum payments and then some"?

Because you had been paying more than the minimum payments, or did they ask you about your income etc?

If it's the former, it seems like a penalty for people who pay more than the minimum.

CMB93

Because I’d been paying more than the minimum each month while I said I was struggling financially after my boyfriends accident. I was extremely annoyed, as I paid only £50 more each month to ensure that when interest was charged, I wouldn’t go overdrawn.

It did feel like I would have been offered a bit more help if I’d missed payments and gone over my limit!

CakeCrusader

They did exactly the same to me (I'd pay three times the minimum payment each month to clear it off quicker) so I did a balance transfer to a 0% card. I didn't close the account right away but I didn't use the card either. They kept halving the credit limit every couple of months so I cancelled it. I'm not sure what their marketing strategy is, but they don't appear to like it when people pay more than the minimum each month.