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

jamalfatty

ad44downey wrote: »

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

I'm not defending these increases at all, but I'm also not of the opinion that they are deliberately increasing them purely to trap people and make profit. We have a very competitive financial market in the UK and if one company decides to increase an APR to what most people deem very high, myself included, (i.e. 34.9%) then there are plenty of other companies that they can use instead for a more competitive rate. If they are unable to get credit elsewhere to move this balance then they obviously do not have brilliant credit-worthiness and this may justify the reason for the increase

Badger_Lady

jamalfatty wrote: »

I'm not defending these increases at all, but I'm also not of the opinion that they are deliberately increasing them purely to trap people and make profit. We have a very competitive financial market in the UK and if one company decides to increase an APR to what most people deem very high, myself included, (i.e. 34.9%) then there are plenty of other companies that they can use instead for a more competitive rate. If they are unable to get credit elsewhere to move this balance then they obviously do not have brilliant credit-worthiness and this may justify the reason for the increase

We need to find out for sure whether the rate rises include existing balances.

I have no problem with them increasing their rate for new purchases - they are warning customers in advance of them making said purchases, therefore it's "their own fault" if they end up paying loads of interest.

However, if someone (like the OP) has an outstanding debt of over £1000 that they are gradually paying off, and their interest on that existing debt is suddenly hiked up to extortionate levels, what chance have they got of ever paying it back? The credit card company is effectively saying, "right - there's a credit crunch going on, so we're going to charge you an extra £3k even though you're already in the red".

Can anyone confirm which scenario we're looking at here?

itsnever2lateisit?

I dont have an MBNA card, but my experience with Citicard when they upped the rate is as follows.

I could write to them, terminating the agreement, and then the existing balance would continue to attract interest at the old rate. That also means that I would no longer be able to use the card, and once the balance is paid off the account closed.

If I choose to continue to spend on the card then that was effectively my acceptance of the new rate, chargeable on the existing balance as well as new transactions.

I have to say this information was buried in the small print. Luckily for me I have been able to transfer the whole outstanding balance to a 0% card:j

jamalfatty

Badger_Lady wrote: »

We need to find out for sure whether the rate rises include existing balances.

I have no problem with them increasing their rate for new purchases - they are warning customers in advance of them making said purchases, therefore it's "their own fault" if they end up paying loads of interest.

However, if someone (like the OP) has an outstanding debt of over £1000 that they are gradually paying off, and their interest on that existing debt is suddenly hiked up to extortionate levels, what chance have they got of ever paying it back? The credit card company is effectively saying, "right - there's a credit crunch going on, so we're going to charge you an extra £3k even though you're already in the red".

Can anyone confirm which scenario we're looking at here?

I've had an MBNA card in past, standard T&C's would mean whole balance is charged at new rate

Firsttimebuyer_4

Right.....

I phoned up MBNA again today and I was much more firm and had my points written down before hand.

First things first! The new rate applies to your current balance as well...not just new transactions...

Second thing! I stayed firm on the phone and they have decided to keep my rate at the old contract rate!!!! 14.9% YAAY (still by far the highest rate I have on any loan/card...my highest credit card apart from MBNA is 9.9%)

Here's how I did it:

I phoned the MBNA customer services number on 0800933 944.
Important here is that I was very polite...Extremly polite in fact and even "flirting" a bit with the woman on the phone (I'm a man ). I asked if the rate increase would apply to my outstanding balance or just new transactions to which she replied it would apply to all transactions.

I then asked her (still very polite) as to why I the rate was increased. She replied that it was due to an account review. I then went on to say that my account if managed very well, with no missed payments etc and that goes for all my credit cards/loans. She then said she would forward me to the "Rates and Fees" department (whatever that is). I asked for a direct phone number just incase they hung up for me. The direct number to this department is 0800 7831116. I didnt have to ring it though since she passed me on and after about 5 minutes I spoke to another lady.

This department in fact the "Card Services" department..... I went through the whole story again (as above) still being very polite. When she tfinished her speech about how this has been applied to my account due to a review, variable rate etc I played the following card:

In a firm (but still polite voice): "I feel that this does not represent fair customer treatment and the rate increase is punitive and selectively applied. So I would like to make a formal complaint......."then kept quiet.

Silence for a few seconds and she said "Can I put you on hold for a minute....?"
Couple of minutes later she said "I have just spoken to my manager and we have decided that we will keep your interest rate as the original 14.9% and we will send you a letter to confirm this". I then said "Thank you very much for this, so you will send me a written confirmation of our conversation?" She replied "Yes, you will receive this shortly". I ended "Thank you very much and have a Happy Christmas."

Now, I can only wait for the letter to arrive.....I will update you when I get it.

I had 1 more point written down incase they didnt back down..
In that case I will make a formal complaint to the FOS and ask for a Subject Access Request in order to see a copy of all data you hold on me. This will enable me and the FSO to understand why I have been selected for a rate increase. I will do so in writing.

Yaaaay!

peawack

jamalfatty wrote: »

I'm not defending these increases at all, but I'm also not of the opinion that they are deliberately increasing them purely to trap people and make profit. We have a very competitive financial market in the UK and if one company decides to increase an APR to what most people deem very high, myself included, (i.e. 34.9%) then there are plenty of other companies that they can use instead for a more competitive rate. If they are unable to get credit elsewhere to move this balance then they obviously do not have brilliant credit-worthiness and this may justify the reason for the increase

I don't get it !
' If they are unable to get credit elsewhere.........this may justify the reason for the increase '
Profiteering by definition

jamalfatty

peawack wrote: »

I don't get it !
' If they are unable to get credit elsewhere.........this may justify the reason for the increase '
Profiteering by definition

Not at all, do you understand how APR's are set? The risk to the bank of not recovering all the funds lent out is a major factor in determining rates. Therefore if someone is unable to get credit elsewhere that would suggest their credit-worthiness is not brilliant or they are at the limit of what lenders think is acceptable, thus they are a higher risk and the APR is set accordingly.

http://en.wikipedia.org/wiki/Risk-based_pricing

Dylanwing

Jamal, good post, good explanation and clarifies a lot. Mind you, it is still profiteering in my opinion!

arnie7

If you don't complain about the rate increase, they'll call you to offer a loan via their affiliate loans.co.uk .

Rates from them run from 10.3% to 17.5% on SECURED loans which is a good deal more than normal mortgage rates.

I suspect that the jump to 34.9% is an effort on their part to move people onto secured loans and thereby improve the credit quality for MBNA, hence ringing up to complain will almost always be successful. I'd have thought that this rate wouldn't sit too well with the FOS if a case ever got that far.

My thinking is that it'll almost certainly reduce the overall quality of their customers in that those that can repay their borrowings will do so (and pretty sharpish at 34.9%) whereas those that can't will end up defaulting on their borrowing at those rates. Remember too that MBNA set the minimum payment at the interest due plus £5 so moving from 16% to over 30% will quite simply double the repayments due.

mummytofour

!!!!!! it didn't even occur to me to shout at them, I just went to the cccs as the MBNA increase to 25% was the last straw and I decided to no longer live off beans so I could afford their interest rates, family life got the better of our finances.