Catalogue Apr increase

dominicthm

I have had an account with JD Williams for a couple of years. There is a small balance of 250 at the moment. 
About 3 weeks ago they wrote to me to say my limit was been increased to 1500,all payments have been on time since the account was opened. 

This week a letter arrived telling me they viewed me as an "Increased risk" and the interest rate was going up to 59.9%.

I have called them to ask for the reasoning around this, I may as well have asked the dog!. 
I am aware that if credit card companies take this action you have the right to pay the debt off at the old rate, I can't find anything regarding catalogue accounts. 

Obviously the sensible thing to do is to pay it off and never deal with them again, I'm not sure how doubling the interest rate of a customer they see as a risk makes it more likely that they will pay, I understand the concept of risk based pricing but it does seem to defy logic. 

If anyone has any knowledge around this I would be very grateful for your advice. 

Thanks 

unholyangel

Its basic contract law - at the time you took the finance out, you agreed to a apr of x%. So they cannot now change it y% because you never agreed to accept that obligation at the time you entered the contract. 

Hermione_Granger

unholyangel said:

Its basic contract law - at the time you took the finance out, you agreed to a apr of x%. So they cannot now change it y% because you never agreed to accept that obligation at the time you entered the contract. 

When they took out the account, they  agreed that the interest rate could be changed provided that 30 days notice was given.
The interest rates given for loans and credit are often (as in this case) shown as something such as APR 28.2% variable 

Our right to vary the agreement As our agreement with you could last a long time, sometimes we may want or need to make changes to it. These may include (but are not limited to):

1. introducing new charges or changing existing charges;
2. changing the interest rate that is applicable to your account; or
3. changing the terms of your agreement, including how we calculate your minimum payment.

born_again

This is also posted this in Credit card section.

dominicthm

Thanks for the comments, what I need to know is if the same rights apply to this as a credit card, can i insist on paying (over time) the balance at the current rate with the account frozen, I have asked them this but the advisors seem incapable of understanding basic maths, they certainly have no knowledge of credit agreements. 

Ectophile

You can tell them that you do not accept their APR increase.  They will close the account.  You can carry on paying off any credit you still owe at the APR you agreed to when you borrowed the money.

unholyangel

Hermione_Granger said:

unholyangel said:

Its basic contract law - at the time you took the finance out, you agreed to a apr of x%. So they cannot now change it y% because you never agreed to accept that obligation at the time you entered the contract. 

When they took out the account, they  agreed that the interest rate could be changed provided that 30 days notice was given.
The interest rates given for loans and credit are often (as in this case) shown as something such as APR 28.2% variable 

Our right to vary the agreement As our agreement with you could last a long time, sometimes we may want or need to make changes to it. These may include (but are not limited to):

1. introducing new charges or changing existing charges;
2. changing the interest rate that is applicable to your account; or
3. changing the terms of your agreement, including how we calculate your minimum payment.

Yeah and they can do that - but only for new purchases. Not existing ones. 

You can't have a term that allows one party to vary the terms of an agreement already made to their benefit and the detriment of the other party. 

unholyangel

op have a read of CMA's unfair term guidance

Particularly these sections:
Trader's right to vary terms generally (paragraph 5.21.1 onwards)
Right to change or determine what is supplied (paragraph 5.22.1 onwards)
Price variation clauses (paragraph 5.23.1 onwards).