Default for £60 CC Overspend without warning

Marleyuk

Hi,

My wife received a letter today confirming a notice (default charge) was being applied to her account because she made a transaction that put her credit card £60 over her credit limit.

The balance of the card is paid in full every month, no notifications had been received suggesting she was approaching the limit, and outside of this letter, nothing to confirm she had gone over the limit.

She called Virgin to offer to pay the balance off early this month and request the notice be removed but the staff member abruptly refused and said there was nothing that could be done.

A default feels like an extreme reaction to a £60 overspend given if she had been aware, she would have resolved it immediately.

Outside of a complaint, is there anything else she can do to remove?

bradders1983

It isnt a "default".

Marleyuk

bradders1983 said:

It isnt a "default".

This is the letter they sent. The person at Virgin suggested it would appear on her credit file?

phillw

Did you bring the balance within the limit as soon as you received the letter, despite what they said?

If so I would try again and ask nicely and point out that it was the first time and you thought they would have text you, but you'll be more careful in the future.

Some banks are switching over to using alerts in mobile apps instead of texts, if you already have the mobile app installed then you could also say that you thought that would have warned you.

If not then you could ask if there was anything you could do to avoid going over your limit and if they say to install the app, you could point out that if you'd been made aware that you should install the app then you wouldn't have been charged.

Marleyuk

Thanks for your response.

The letter was only received today and she paid it off on the phone whilst asking the advisor if it could be removed.

I’ve told her to call back and hope someone more helpful answers the phone.

MattMattMattUK

It is correct, she has gone over the limit on the card, she is contractually obliged to stay below that limit, it is your wife's job to monitor her own spending. They will not remove the data from your wife's credit record as it is correct, credit records also show available credit and utilisation, so if she was using more than her available credit that is obvious she has gone over the limit even if the flag was removed.

They may agree to waive the charge, but they will not change the data they report to the CRAs. They most important thing is to make sure that it does not happen again, one instance is not really an issue unless it happens in the middle of a mortgage application, one instance with no repeat behaviour will have little to no impact after several months.

MattMattMattUK

Marleyuk said:

This is the letter they sent. The person at Virgin suggested it would appear on her credit file?

People often use default to mean missed payments, however that is not strictly true, so non-payment is just one kind (and the most common kind) of default. 

Default In Finance, default is failure to meet the legal obligations of a loan

Marleyuk

MattMattMattUK said:

It is correct, she has gone over the limit on the card, she is contractually obliged to stay below that limit, it is your wife's job to monitor her own spending. They will not remove the data from your wife's credit record as it is correct, credit records also show available credit and utilisation, so if she was using more than her available credit that is obvious she has gone over the limit even if the flag was removed.

They may agree to waive the charge, but they will not change the data they report to the CRAs. They most important thing is to make sure that it does not happen again, one instance is not really an issue unless it happens in the middle of a mortgage application, on instance with no repeat behaviour will have no impact after several months.

It has happened in the middle of a mortgage application.

Why would they process the payment if it was going over her available limit? 

MattMattMattUK

Marleyuk said:

It has happened in the middle of a mortgage application.

You should speak to your broker ASAP if you have not already.

Marleyuk said:

Why would they process the payment if it was going over her available limit? 

Some do, some do not, there may have been payments in processing which did not all go through until afterwards which brought the overall total above the limit, they may have a clause that they will process a transaction up to £X / X% over the limit, but apply a fee etc. just as banks will often let people go into an unauthorised overdraft rather than blocking the transaction. 

Unfortunately it is down to the individual not to exceed the agreed line of credit, lenders may offer services (text messages, app alerts etc.) to assist with this, but the legal and contractual obligation is with the individual. 

bradders1983

OP, i know its human nature to protect your wife but she has to shoulder some of the blame here, surely she knows the rough balance of her cards and the limits on them?

Marleyuk

bradders1983 said:

OP, i know its human nature to protect your wife but she has to shoulder some of the blame here, surely she knows the rough balance of her cards and the limits on them?

It’s £60... it’s linked to one payment. 

It’s an exceptionally easy oversight to have made, with the consequences significantly outweighing the crime.

With no notification or grace period, the banks duty of care to their customer is questionable.

I guess we’ll see how the FOS perceives it.