PERSISTENT DEBT - Credit Cards

grahamtaylorAAAA

In calculating credit card account "recommended payment" Bank of Scotland and others are ignoring the lower promotional interest rate applicable to the account. Why is this ?

born_again

I would guess that FSA rules state they have to use the interest rate the account would be at as normal. Not any promotional rates.
Also they could just be examples to show how it works.

[Deleted User]

born_again said:

I would guess that FSA rules state they have to use the interest rate the account would be at as normal.

FCA these days...

SnowTiger

grahamtaylorAAAA said:

In calculating credit card account "recommended payment" Bank of Scotland and others are ignoring the lower promotional interest rate applicable to the account. Why is this ?

Having identified someone as being in 'persistent debt', BoS expects the balance at that time on their account to be repaid within four years.

https://www.bankofscotland.co.uk/assets/pdf/credit-cards/terms-and-conditions/general-terms-and-conditions.pdf: 

When you fall into persistent debt, we will separate out the amount you owe on your account at that time. We will need to work with you so that you can repay that amount over a reasonable period (e.g. 4 years). To help you do so, your statement will also include a “recommended payment amount” as well as your required minimum payment. The recommended payment amount is what you will need to pay to repay your balance in a reasonable period and to repay any new spend so that you do not fall into persistent debt again. It won't be a breach of this agreement if you don't pay the recommended payment amount, but this may mean we may then have to stop you using your card for a reason explained in B2.5.

The 'recommended payment amount' is, as suggested, a recommendation.  Punters can choose to continue paying only pay 1% (plus interest, if any) of the their balance every month, however BoS may close their account (to new spending).

Have you been identified as being in 'persistent debt'?  If so, presumably charges and interest on your credit card account have totalled more the principle you've repaid during the past 36 months.  Is that likely to change during the next 48 months unless you increase payments?

Dandytf

I'm in effect letting one card go, tried my best though Aqua now want two 350 'booster' payments in addition to already raised minimum payment,
Nice to know that it will be repayable over 48 months -1600 approx and that cra wont' be negatively effected.
Whilst I appreciate persistent debt is FCA'S rule, Why take over 48 months when I'm on track to clear balance between 24-30 months.
Not too worry, wont do any harm as I re pay and watch balance and limits reduce and quite possibly, closed in 4 years approx.