Persistent Debt - Barclaycard

Pop_Sox

I am getting to the end of paying debts off, the last big loan, which is a car loan, is paid off in this June, which is £309 a month. I have not got any arrears, missed payments or late payments for the last 6 years for anything. I have kept on top of everything even though it has taken a while to pay it off, and some months I have had very little money left over.

Due to a relationship break up six years ago, I had to use my Barclaycard to purchase contents for a new home, this was done as cheaply as possibly, but still was a fair amount, I also had to sometimes use the credit card to buy groceries, fuel for work etc. due to the other commitments. The credit limit at that time was £14,500. The balance at the moment is around £7K although it has never gone above £8K. I have paid off the minimum amount every month (around £180), sometimes I have paid £20 or £30 more a month if I can afford it. My plan was to transfer it to a 0% interest card once my car loan finished, and pay it down at £500 a month.

About 18 months ago the persistent debt letters started coming, and then Barclaycard would reduce the credit limit to a few pounds over whatever the balance was, and then every time the balance went down they would reduce the credit limit to around £200 over the balance, the credit limit is now £7,200. I don't use the card any more.

The issue with this is that my credit rating has also gone down drastically - it used to be excellent, as instead of utilising 50% of my credit available, I am utilising practically 100% of it for the last 18 months, and as such am deemed to be "over stretching" myself. I looked into this when I kept getting turned down for 0% balance transfer cards or low interest loans, and was told it was due to my Barclaycard being maxed out constantly. The only loans available to me are the huge interest rate loans such as Amigo loans, or credit builder credit cards. This has infuriated me, as Barclaycard have ruined my chances of getting any alternative but paying their rates of interest for the next x amount of years.

I recently had the letter saying the card would be suspended unless I took out a paydown plan of £211 a month with them which had a lower interest rate - which is £40ish a month than I am paying now, if I took out this plan the card would also be suspended. So the card will be suspended either way! Alternatively they advised me to look for a low interest loan or balance transfer card - well I would - but they've messed up any chance of that!!! Surely this is sharp practice, as I am now tied into their interest rates?

There was no other reason for them reducing my credit limit - my payments were always made on time via direct debit, I have never exceeded my credit limit - or even come close to the original £14.5K limit they gave me.

I have raised a complaint with Barclaycard, as when I phoned to speak to them I was put through to an Indian call centre, with a strongly accented person who kept thinking I had phoned to take out the payment plan, so I escalated it to a complaint so they would ring me.

As a nurse, I have asked Barclaycard to phone me between 8.30am and 9am, which is when I know I can take a call and won't be with patients, however they have insisted on phoning twice now at 2pm and leaving messages.

Is there anything I can do about this? Obviously they won't put my limit back up to it's original so short of paying it off once I can, I am stuck with the poor credit rating and unable to access any low interest products due to this. I am also a renter, this could have an adverse effect on me should I decide to move house as I won't pass the credit check.

[Deleted User]

No, it's not sharp practice - it's away of them complying with the regulations. And your credit rating is irrelevant. It's not a factor in lending. Neither is it a factor in your rental searches, so that's fine.

The utilisation is an issue, but it's your affordability, history of minimum payments and lack of disposable income which is the major problem and the reason why you're not getting accepted for credit.

Get to the DFW boards for advice on cutting costs and getting rid of the debt faster. 

Pop_Sox

Deleted_User said:

.......And your credit rating is irrelevant. It's not a factor in lending. 
The utilisation is an issue, but it's your affordability and lack of disposable income which is the problem. Get to the DFW boards for advice on cutting costs and getting rid of the debt faster. 

If it is not a factor in lending, why cannot I access any of the lower interest or 0% offers? My credit rating numerically is fine - it is in the very good range, but when it comes to lending I cannot get any of the special offers, and when followed up I am told it is due to the Barclaycard. I do not have a lack of disposable income, as mentioned in my OP a lot of it is going on my car loan which has four months to run, however no payments have been missed or late, I am not overdrawn every month and manage on my income from a full time job with the NHS with some left over. 

[Deleted User]

I explained why in my post.  Affordability, minimum payment, lack of disposable income. 

If you had disposable income, you would be clearing the debt much faster and in fact in full every month.   The money you spend on your car is not disposable income.

Your credit rating can be in whatever range you want.  If will neither help not hinder.  You need to address the underlying issues of too much debt and not enough income.

Pop_Sox

I get that, but due to Barclaycard constantly reducing my credit limit rather than just suspending the card if they were that bothered about my affordability, they have effectively tied me into their high interest rates rather than being able to use a product which will clear it quicker.

[Deleted User]

Ask them to suspend the card then - that may freeze your limit as it is.

But cutting your costs and clearing both your card and loan are the only secure ways of improving your situation.  Then work on getting some saving behind you so as not to be reliant on debt.

sourcrates

The FCA had a crackdown on persistent debt, it was meant to be a positive move to help people get out of the debt cycle, basically anyone only paying around the minimum payment every month can be deemed to be in this category. 

Lenders such as Barclaycard have responded by doing what you have described, lowering credit limits, and insisting on higher payments, which I don`t thing was the intended result the FCA were looking for.

However, we are were we are, so you have the choice of either making the higher payments, or if that`s not possible, then some kind of arrangement will be necessary.

[Deleted User]

sourcrates said:

The FCA had a crackdown on persistent debt, it was meant to be a positive move to help people get out of the debt cycle, basically anyone only paying around the minimum payment every month can be deemed to be in this category. 

Lenders such as Barclaycard have responded by doing what you have described, lowering credit limits, and insisting on higher payments, which I don`t thing was the intended result the FCA were looking for.

However, we are were we are, so you have the choice of either making the higher payments, or if that`s not possible, then some kind of arrangement will be necessary.

I don't see what other result to deal with persistent debt you could do as a lender beyond dealing with it as a hardship thing and freezing the card (could cause people problems paying for things) - paying more to reduce the debt and thus the interest and stopping people spending beyond their limits was the only way to get out of the cycle of debt

mjm3346

A "one size" regulation again assisting most but all.

"This has infuriated me, as Barclaycard have ruined my chances of getting any alternative but paying their rates of interest for the next x amount of years."
Less than 2 years if you pay off at the £500 a month you planned before there was no 0% option

.

Pop_Sox

Yes I know that I can pay it off quicker once my loan finishes - at Barclaycard's 16.4% rather than a 0% balance transfer which I now cannot get. If they were that concerned about my debt, considering that I have already paid plenty of interest to them, why not offer an interest rate comparable to a bank loan on their paydown plan?

[Deleted User]

Because your risk level is too high and they have to price that into the rate.