Barclaycard to hike minimum payments in major credit card shake-up - MSE News

MattMattMattUK

RichardCBG said:

Absolutely disgusting interest rates applied to all credit cards across the board.

Not really, it relates to various costs, including defaults, the margin on credit cards is still relatively low, the banks do not make 29.9% interest as pure profit. The cost of that form of borrowing is clearly laid out, known to all involved and is a choice, if one does not want to pay 29.9% APR the do not borrow money on a credit card.

RichardCBG said:

If the FCA are 'pressurising' credit card companies in an effort to reduce personal debt then the FCA as a Government agency should regulate their interest charges and get them reduced to enable reductions in the levels of personal credit. 

That makes no sense, the issue is people borrowing too much money, for example around 40% of all holidays are taken out on credit, that is not sensible and is in no way essential, borrowing has become frivolous and too many people see carrying debt only as a monthly outgoing, not as a debt which has to be paid off. 

RichardCBG said:

We're all suffering from the financial downturn so then it is not unreasonable that credit card companies should take responsibility for the levels of interest they charge and recognise that they cannot continue to bleed their customers with scandalous increases in minimum payments.

Not all of people are, some are doing very well, others have had no change, some of us have had a massive drop in earnings, but that happens. The increase in minimum payments is designed to get the debt reduced quicker, it is actually beneficial to the borrower, for the same reason why people are always told to pay above the minimum payment. People borrowed on the terms offered, that was their choice, they do not now get to complain that they did not like what they previously agreed to and to demand to be absolved from their debts.

RichardCBG said:

The credit card industry has needed regulation for years and it is about time the Government and the FCA stepped into enforce interest rate reductions.

The "credit card industry" is already heavily regulated, there is no reason, legal or otherwise to force lenders to offer lower rates, indeed with the low margins on financial products even a 5% reduction in rates would probably see the majority of credit cards withdrawn from the market, possibly with cards only being issued when secured against property. Lenders are already beginning to reduce the availability of borrowing, if interest rates were slashed then you would probably see credit card borrowing severely limited and possibly removed from non homeowners, removing the benefits of consumer protection from a large group of people. 

RichardCBG

 'that's the fault of irresponsible borrowing, not lending' ???
Credit card companies were offering the earth in credit limits to their customers not that long ago. That was totally irresponsible on their behalf. It was an easy route for some who needed the money at the time. Now in the present financial downturn we are expected to cut our cloth to fit whilst they continue to apply the same interest rates and make the same profits ?? Even offering 'payment holidays' whilst allowing the same interest to accrue. No matter what is said in defence of this greed (because that is what it is) they have no apparent social obligations whatsoever to help their customers who are struggling with their 'irresponsible' borrowing ?? Defend credit card companies as much as you wish and blame the borrower. That seems to be the trait on this thread.

badmemory

Just because a credit card company offers you more credit than you earn in a year does not mean that you have got to use it.  They offered payment holidays because they were asked to & it probably save them money from all the nasties they would have to do when people couldn't pay for a while (which would have landed up costing their customers more).  But nothing will change the fact that if you run up debts then you have a personal responsibility to pay it back or reach an arrangement which will have repercussions.

MattMattMattUK

RichardCBG said:

Credit card companies were offering the earth in credit limits to their customers not that long ago. That was totally irresponsible on their behalf. 

Not really, they were offering credit, at various rates and limits depending on risk profiles.

RichardCBG said:

It was an easy route for some who needed the money at the time. 

It was an easy route to debt if you did not manage it properly, for most people who use their cards sensibly it was an easy route to extra consumer protection.

RichardCBG said:

Now in the present financial downturn we are expected to cut our cloth to fit whilst they continue to apply the same interest rates and make the same profits ??

We are always supposed to cut our cloth according to our income, that is just common sense. You are expected to keep your outgoings within your income, just as the banks are having to do. They are charging the same interest rates, rates that people signed up to, agreed to and then borrowed against, knowing the rate that interest would be charged at. The banks are making lower profits on credit cards at the moment due to rising defaults.

RichardCBG said:

Even offering 'payment holidays' whilst allowing the same interest to accrue

Yes, that is the deal on offer, if you do not like it then do not take it, or do you believe that people should get something for "free" because they are poor at financial planning?

RichardCBG said:

No matter what is said in defence of this greed (because that is what it is) they have no apparent social obligations whatsoever to help their customers who are struggling with their 'irresponsible' borrowing ??

Do you think that it is "greed" because they charge an interest rate of 29.9%, but that actually means that they make a net margin of around 2%, or do you believe that they should offer an interest rate of 5%, but make a net loss, because it suits you? They do have obligations and they follow them quite strictly, which is why people who are in "persistent debt" will have their cards and interest frozen, meaning that they can no longer borrow more, but that there will be no additional interest applied to their debt, the banks then lose money on these customers.

RichardCBG said:

Defend credit card companies as much as you wish and blame the borrower. That seems to be the trait on this thread.

What you will find is that most on these boards are pragmatic and realistic. People made the choice to borrow, they knew the terms they were borrowing on and the costs of that borrowing, they can hardly complain when they are required to pay that money back according to those terms. Or do you think that it is entirely reasonable to borrow money with no intention of repaying it under the agreement you signed up to?

RichardCBG

"Or do you think that it is entirely reasonable to borrow money with no intention of repaying it under the agreement you signed up to?"
No not at all.  I think that is a rather immature assessment of the situation I have previously brought to this discussion. I simply would like the credit card companies to recognise the fact that 'persistent debt' is not of the borrower's making. The credit companies moved the goalposts regarding what THEY considered to be the length of time it now took to repay the outstanding credit. Quoting the FCA who changed the 'rules'. 
I have a credit card - the company concerned  for obvious reasons - will not be named. However - I am paying back DOUBLE the minimum payment every month. Then I was informed that I was in 'persistent debt' so they offered me a repayment plan that allowed me to pay LESS per month over a LONGER period of time. Of course there were no changes to interest rates within this 'payment plan'. (see your comment above) So when I asked them why they were extending the period it would take me to pay back the outstanding amount than it would with the payments I was already making - their answer was to suspended my card. Stating that they had no idea how long it would take me to pay back the outstanding amount at the amount I was already paying per month ?? Really ?? (They actually said this) So they were offering me a 'repayment plan' to 'help me to afford' to pay LESS every month over a longer period of time to settle the outstanding amount ?? I rejected that - as I had no desire to prolong the period of outstanding credit than I have originally worked out that it will take to settle it. Which in my case is about 18 months from now. So what did they do - they offered me a 24 or 36 month repayment plan - when they could easily work out that in 18 months or thereabouts from now -  with the existing monthly payments maintained -  the outstanding amount would be fully settled. But no. They decided they wanted to make the debt even MORE 'persistent' over a longer period.
So - in summary -  if I accept a payment plan - the debt takes longer to pay and therefore by default - becomes more 'persistent'. 
And Mr MattUK - perhaps you would like to again take the high moral ground here and defend the credit card company concerned ?? You don't happen to be a banker or work within the credit card industry by any chance do you ??

MattMattMattUK

RichardCBG said:

No not at all.  I think that is a rather immature assessment of the situation I have previously brought to this discussion.

You are the one advocating that people be allowed to borrow money but not have to pay it back according to the terms they agreed to when they borrowed it, pointing out the irrationality if your position is not immature.

RichardCBG said:

I simply would like the credit card companies to recognise the fact that 'persistent debt' is not of the borrower's making. The credit companies moved the goalposts regarding what THEY considered to be the length of time it now took to repay the outstanding credit. Quoting the FCA who changed the 'rules'. 

The credit card companies have not "moved the goalposts" they have changed what they do, based on rules and regulations brought in by the FCA, they do not have the luxury of ignoring them. The rules actually benefit the consumer as they will ultimately pay less interest.

RichardCBG said:

I have a credit card - the company concerned  for obvious reasons - will not be named. However - I am paying back DOUBLE the minimum payment every month. Then I was informed that I was in 'persistent debt' so they offered me a repayment plan that allowed me to pay LESS per month over a LONGER period of time. Of course there were no changes to interest rates within this 'payment plan'. (see your comment above) 

That is very "unusual" to say the least, the offering to those in persistent debt usually freezes the card, not allowing addtional borrowing, but decreasing the interest charged substantially. 

RichardCBG said:

So when I asked them why they were extending the period it would take me to pay back the outstanding amount than it would with the payments I was already making - their answer was to suspended my card. 

The normal procedure for those in persistent debt is to freeze the card. 

RichardCBG said:

Stating that they had no idea how long it would take me to pay back the outstanding amount at the amount I was already paying per month ?? Really ?? (They actually said this) So they were offering me a 'repayment plan' to 'help me to afford' to pay LESS every month over a longer period of time to settle the outstanding amount ?? 

Even paying double the minimum payment it usually takes years to pay off the debt, especially if is large because of the effect of interest wiping out around 90% of the minimum payment itself. What your saying does not add up as it does not follow the guidelines, nor the pattern of behaviour that almost everyone else has from credit card lenders.

RichardCBG said:

I rejected that - as I had no desire to prolong the period of outstanding credit than I have originally worked out that it will take to settle it. Which in my case is about 18 months from now. So what did they do - they offered me a 24 or 36 month repayment plan - when they could easily work out that in 18 months or thereabouts from now -  with the existing monthly payments maintained -  the outstanding amount would be fully settled. But no. They decided they wanted to make the debt even MORE 'persistent' over a longer period.

What you are saying really does not add up, because it is not what is in the guidelines, or the lenders policies, or their behaviour in relation to others, it would appear that you have perhaps misunderstood what they have offered. 

RichardCBG said:

So - in summary -  if I accept a payment plan - the debt takes longer to pay and therefore by default - becomes more 'persistent'. 

In all the examples I have seen, both on here, in the press and with other people is that the debt might take longer to pay off, but the interest rate is slashed, usually to less than a quarter of the card's APR, so making it significantly easier to pay the debt and resulting in a lower total paid because of less interest. 

RichardCBG said:

And Mr MattUK - perhaps you would like to again take the high moral ground here and defend the credit card company concerned ?? 

I am not taking the ground of "defending" the credit card lenders, I am taking the ground that people sign up and agree terms and that they should repay their debts, that they should pay the interest that they agreed to pay on those debts and that there should not be some magic get out of jail free card handed to them. The rest of us have to repay our debts, that is the contract we agree to.

RichardCBG said:

You don't happen to be a banker or work within the credit card industry by any chance do you ??

No, I work run my own marketing company and have no connection to the financial industry (other than having bank accounts, credit cards, a mortgage and insurance), I am merely being rational about things, if people sign and agree to contracts then they are obligated to follow them through.

RichardCBG

"What your saying does not add up as it does not follow the guidelines, nor the pattern of behaviour that almost everyone else has from credit card lenders."
I can assure you that after repeated exchanges with the credit card company concerned over the last few months - I FULLY understand what they are offering. But it is an increased 'persistence' of the debt. Whichever way you look at it. 
"The credit card companies have not "moved the goalposts" they have changed what they do, based on rules and regulations brought in by the FCA, they do not have the luxury of ignoring them. The rules actually benefit the consumer as they will ultimately pay less interest."
My point is that the original credit agreement is a contract between the credit card company and the customer. Something you will be well aware of as you run a marketing company. Thus a change in contract has to be agreed by both parties concerned. I get NO say here. My card is now suspended and I have never missed a payment - I have not used the card in well over a year now and have no intention of doing so. So suspending it - made no difference to me as a customer. But yet they 'changed what they do' and expected me as a customer to go along with that because I had no way of settling the card in one payment. Their response (again) was to offer me an extended repayment period at a lower monthly payment. I never once asked them to reduce my payments. And in doing so - they themselves defeated totally their own argument of 'persistent debt'. 
My comments re interest rates may have been poorly worded initially. However - the point remains that the credit card company have changed the terms of the contract between us under the guise of 'persistent debt' and I refute my debt is persistent. Given they themselves are asking me to extend it. How can it be 'persistent' when I have never used the card in over 12 months and am paying back double the minimum payment with 65% of the payment going towards reduction of the outstanding amount (and in 12 months from now that will increase to 75% in reduction of the outstanding amount or more) - how is this then defined as persistent' in any sense ?? Every debt is 'persistent' to one degree or other until it is repaid. 
I will not respond to any further comment regarding this because it would seem to be rather pointless as our opinion differs. And I have seen comment from others elsewhere that would agree with what I have been saying. I continue to maintain however that the FCA were wrong to apply yet more pressure to people who have credit card debt when in fact - they should have been doing the opposite. If the credit card company is OK with how the customer is handling the debt - leave well alone. The credit card companies are quick enough off the mark to deal themselves with defaulted card accounts and have their own methods. Otherwise if a credit card customer has financial difficulties - there are processes already in place to deal with that too. But to impose a change like this and squeeze customers (pay more every month else we'll suspend your card and declare that you are in persistent debt) because the FCA says so - is morally wrong and should be challenged. There was NEVER EVER any issue with my credit card or payments until this issue arose last year. I had planned to pay it off in a certain period and my monthly payments reflected that. The credit card company never complained - this only started last year - I have been a customer of theirs for about 5 years now or more.
However - I rest my case. And have no more to say on the subject as there would appear to be no point in any further discussion.

CRISPIANNE3

I pay my account in full every month and usually there are lots of balance transfer offers on my 4 Barclaycards.  However I notice this month they have all disappeared. Not bothered but it is either a sign of the times or just me!

[Deleted User]

Certainly a sign of the times, but we can't rule out it also being you.

cymruchris

CRISPIANNE3 said:

I pay my account in full every month and usually there are lots of balance transfer offers on my 4 Barclaycards.  However I notice this month they have all disappeared. Not bothered but it is either a sign of the times or just me!

I had none last month and two this month on my BC, so they are still offering. It'll depend on the customer profile they want to offer them to - it'll no doubt change on a rolling basis.