MBNA credit card customers wrongly chased for 'overdue' bills after agreeing payment holidays

Former_MSE_Stephen_B

MBNA credit card customers who agreed a payment holiday because they are struggling due to coronavirus have been mistakenly sent text messages chasing 'overdue' payment. But if you're received one of these texts you can safely ignore it - so long as you're sure your payment holiday has been confirmed.

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'MBNA credit card customers wrongly chased for 'overdue' bills after agreeing payment holidays'

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motoko

I got one of these texts from Lloyds (which is the same company) after agreeing a payment holiday. Then a week later they reduced my credit limit, to slightly above the current balance. No trouble getting through on the phone, and they confirmed the overdue payment text was an error. However the reduced credit limit still stands, and they can't tell why it was reduced. Pretty sure this is caused by the payment holiday, as I have paid every month on time up to now, and it's not usual to have a credit limit reduced when you're paying on time. I had many cards with different companies over the years and this has never happened to me before, many companies have put my limit up periodically, but never down. 

bradders1983

They clearly see you as an increased risk because you have had to take the holiday in the first place 

onlyfoolsandparking

@motoko, So they've reduced your credit limit, WOW!!! I didn't think the banks would be biting back so quickly, we're not even half way through payment holidays yet. So glad I decided against any payment holidays on anything and yes probably lucky I don't need one but I predict those taking payment holidays will suffer in the future, everybody should know banks are like casinos they never lose!! 

bradders1983

I see no issue with a bank reducing its potential liabilities.  Customers who have to take payment holidays are clearly the customers who dont have much slippage in their finances and may easily have issues again in the future.

onlyfoolsandparking

bradders1983 said:

I see no issue with a bank reducing its potential liabilities.  Customers who have to take payment holidays are clearly the customers who dont have much slippage in their finances and may easily have issues again in the future.

I too see no issue they are correct to do it, I was perhaps attempting to show a little sympathy for those that HAVE to take payment holidays but your spot on with the 'slippage' analogy. This current crisis is certainly exposing the 'Hand to mouth' working model for what it is, ABSOLUTELY USELESS!! and people should avoid it altogether or work their a***s off to get out of it like I did for many years. 

Thrugelmir

motoko said:

 However the reduced credit limit still stands, and they can't tell why it was reduced. 

By applying for a holiday you are effectively saying to the bank that I cannot afford to repay what I already owe. Nor do I earn enough or have any savings to tide me over.  The bank therefore is prudently saying that they will not lend you any further money that potentially you will never be in a position to repay. Thereby limiting their risk exposure. 

born_again

motoko said:

 However the reduced credit limit still stands, and they can't tell why it was reduced. Pretty sure this is caused by the payment holiday, 

A lot will depend on just how much it has been reduced by...
If it is leaving you with virtually no spare funds, then it is sneaky at best, bad at worst. If it was say cutting £9K down to £4.5, but you only ever have a max of £2K balance. Then that is fair.

I'm finding that at the moment, our expenditure is about 80% what it was pre lockdown.

motoko

The balance on the card was fairly high anyway as its a 0% bt card and I've been paying just over the minimum each month. With the reduced limit, the balance is now at over 90% of the limit. It's not a huge problem for me as I don't use it for spending, although there was a reasonable bt offer on it which might've been useful down the line. 

I agree it's sensible for the bank to limit their exposure if they now see me as a higher risk. However, I do think they should give customers a heads up that this is a possible consequence in the info they provide when applying for the payment holiday. 

On the other hand it's possibly a coincidence, and they just happen to have re-checked my credit file, given me a lower credit score than before, noticed I'm only making minimum payments, and reduced my limit accordingly. Although that would be a first for me. 

motoko

Just a quick update in case this happened to anyone else... just got a letter saying "We shouldn't have reduced your credit limit and have now increased this back to what it should have been. I'm sorry this happened."

Still doesn't specify whether the original reduction was related to the payment holiday. Also, not sure this is a genuine error as the letter suggests, or if its related to the fact that I've now started paying again.