MBNA is really taking the mickey with their CC interest rise! What are our rights?

girltuesday_2

They tried to put my interest rate up from 17.9% to 24.9%. I wrote to them pointing out that I always paid on time, often paid more than the minimum payment, and that there had been absolutely no changes to how I run my account for the last few years. I told them to justify the change to me, or I'd go to the Ombudsman...

They put it back to 17.9%

MABLE

I wander how many people who can only get a sub prime card such as Vanquis would like to pay 29%

Badger_Lady

Does it definitely affect your current outstanding balance, OP? I would expect it to only apply to new spending (of course I may be wrong).

I can't believe that it's "fair" for a customer to have terms made so much worse on an existing loan amount - as described in your example, the amount of interest repayable and the time it will take to do so is far, far worse!

Incidentally, I've just had a similar interest rate hike on my Egg card - luckily, I'm at 0 balance as it's just for emergencies... it will be a life-and-death-only emergencies now!!!

Rafter

jamalfatty wrote: »

Risk based repricing of an account happens and is not against TCF so doubt you would get very far, and the complaints only cost the financial institution money if the ombudsman deems them to be a valid complaint - as you have a variable rate credit card then in this case you dont have cause for complaint thus would not cost them anything

Jamal,

I agree that what MBNA are doing is legal in the context of their terms and conditions.

However TCF is about whether the treatment of the customer is fair in this case. Increasing the rate from 15% to 30% (or 9% above base rate to 24% - a 170% increase) suggests that this customer and customer like them are now 170% more likely to default on their account.

This customer has given no indication of increased risk, apart from a high level of credit that might make getting further credit elsewhere difficult.

Personally I think MBNA are profiteering. They know this customer has little option but to pay a higher rate that MBNA can use to subsidise yet more 0% offers to entrap new customers and to cover the lost revenue from having their extortionate penalty charged capped at £12.

I would like for MBNA to be forced to justify the increase to the ombudsman and don't believe they would do so.

Therefore I believe the complaint is a valid one.

Others have obviously 'negotiated' better rates from MBNA and they need to understand that this kind of behaviour is unacceptable in order to cover up mistakes in their lending policies in the past and their reliance on unfair fees.

R.

Firsttimebuyer_4

Badger_Lady wrote: »

Does it definitely affect your current outstanding balance, OP? I would expect it to only apply to new spending (of course I may be wrong).

I'm not 100% sure if its for my existing balance...or what I spend from now on (which will be nothing and has been nothing for the last year or so)

Very good question! The letter I received just stated that my interest rate will from January 2008 be 29.9%.

The latest statement I had estimates next months interest at around £60 if I remember correctly (I'm at work so can't check) which is still the "old" rate of 14.9%. I guess I will see what they estimate on my next statement which will arrive in the beginning of January.....If it is only new transactions I will be a very happy bunny...still annoyed at them increasing my interest rate, but since I'm not spending on the card it doesn't matter that much.

I have already drafted a letter to them, but thanks to all your comments here I will amend it to include the FOS, treating customers fairly etc..

ts_aly2000 wrote:

You have the right to close your account.

I am aware of that, but I have no money to pay off the balance nor will I get another credit card. I have a lot of debt and won't get another card (i know for sure) apart from a vanquis card or another high interest one. I have a lot of debt and I have and am still struggling to make ends meet. That being said, I have always paid on time, never missed a payment etc. etc. In the time I have had my MBNA card (18 months) nothing has changed in how I manage my account.

One more thing...If I start the complaint procedure could MBNA close the account and ask me to repay the whole balance? Also, if they do close the account due to me complaining would that be a bad mark on my credit report?

jamalfatty

Firsttimebuyer wrote: »

Let me get this right.... If MBNA wanted to they could put my APR up to 350% and claim it was due to a "account review" and because I have a variable rate credit card??

Theoretically yes, although i'm sure the regulators would step in if it was taken up to 350%, rather a big difference between 34.9% and 350%. 34.9% although steep is not unusual in this day and age particularly when compared to sub-prime products.

YorkshireBoy wrote: »

I assume any reasonable limit could be set (I use the term loosely) at 'arbitration' by the FOS.
I normally agree with most of jamalfatty's postings, but disagree on this one.
If there have been no major changes in the account management, then I believe MBNA should be forced to explain their 'pricing' to the FOS in response to your complaint.

I would bet my house on the FOS not forcing any credit card company to explain the reasoning behind a reprice on an account as long as they werent taking the pi** as in the 350% example above. And its not just the conduct of an individual account that determines a re-price, many other reasons may be behind it - other outstandings, market conditions, demographics etc

benf90 wrote: »

Is there anywhere you can direct me to that will confirm this? It goes against what I was told when I worked for a bank a few years ago.

From my understanding the cost of a complaint going to the FOS (which I believe is around £300ish for each referral) is charged to the financial institution regardless of the outcome. I don't think the banks would really be happy with the FOS not getting paid unless a complaint was upheld - it would make them bias in the customers favour.

Or do you mean that each complaint is initially 'vetted' to see if it's something they can actually look into in more detail?

http://www.financial-ombudsman.org.uk/publications/technical_notes/QG1.pdf

Smirch_This wrote: »

They bend if you shout at them enough. Be rude, refuse to pay, tell them you're being screwed etc. Be forceful!

You must have got very lucky, I've worked in a financial institution call centre in past, and if anyone came on the line shouting, swearing and being rude without provocation from myself then they would get absolutely nothing - do you think person on other end is going to prefer to help someone who is polite but assertive, or someone being loud, obnoxious and rude?

YorkshireBoy

jamalfatty wrote: »

I would bet my house on the FOS not forcing any credit card company to explain the reasoning behind a reprice on an account as long as they werent taking the pi** as in the 350% example above. And its not just the conduct of an individual account that determines a re-price, many other reasons may be behind it - other outstandings, market conditions, demographics etc

I can see where you're coming from, but just to pick up on your demographics criteria...isn't that a little like re-pricing my home insurance mid-term because 4 of my neighbours were burgled recently?

I appreciate the T&C's are different, but I'm just trying to re-inforce my 'belief' that faced with the OP taking the matter to the FOS the CC company may back down (as they have been reported to have done many times on here).

We must not forget that many (all?) of these increases are computer generated, so the OP has a right to have his/her account rate reviewed manually by a decision maker...surely?

jamalfatty

YorkshireBoy wrote: »

I can see where you're coming from, but just to pick up on your demographics criteria...isn't that a little like re-pricing my home insurance mid-term because 4 of my neighbours were burgled recently?

I appreciate the T&C's are different, but I'm just trying to re-inforce my 'belief' that faced with the OP taking the matter to the FOS the CC company may back down (as they have been reported to have done many times on here).

We must not forget that many (all?) of these increases are computer generated, so the OP has a right to have his/her account rate reviewed manually by a decision maker...surely?

Granted your example about the demographics is a valid one, I was just trying to point out it's not solely based on account conduct.

Most of these decisions are automated and I'm sure many would get their APR's decreased if they call up and make a fuss over it. What I was really trying to get across was that the thread seemed to be going the way of encouraging people to complain to the FOS - my point was this will have little to no effect on whether they do review the APR, and it wouldnt as was suggested cost the bank money each time it was done

ad44downey

jamalfatty defending usury as per usual on these boards. some things never change.

keeperbear

If the global credit crunch gets worse, credit card companies may put interest rates up even more. Not a lot you can do about it, apart from paying back your debt.