shocking 118 interest rate hike - doubled!

tulipchickuk

i’ve just received a shocking interest rate hike on my 118118 credit card from 25.7% to 41.2%
I can’t possibly afford it - what should I do?

cymruchris

Are you carrying a balance? Or do you pay in full each month?

I'm guessing you carry a balance? If so - roughly how much is outstanding?

Are you in a position to take a different credit card and transfer the balance? (Does anything come up on eligibility checkers?)

If there are no other credit cards available to you, and you are in a position of not being able to pay it - you can call them and tell them, and they'll likely freeze the account, and you can come to an arrangement to pay it off, but they'll not allow further spending, and will close the card once the balance is paid off. They'll be best placed to outline the options in more detail.

Credit card providers often assess their customers based on their perceived risk (they don't always get it right) - so for example if you've been carrying a balance for a long time, making minimum payments - that might put you in their higher risk category, and so the rates can go up as above. If they've identified you as a higher risk based on whatever criteria they're using - they can put up the rates (or down if a lower perceived risk).

tulipchickuk

thanks Cymruchris
yes i am carrying a balance so that’s probably why they’ve hiked it
I have read the letter more carefully and see I have the option to ‘opt out’ which will basically close my account and I will be able to pay off the balance at the current rate so that’s probably what I’m gonna do..

fergie_

Especially if you are willing to close the account, it might be worth calling them to see if they will negotiate a lower rate. End of the day they would rather you pay back what you have borrowed, rather than default at a higher rate.

cymruchris

tulipchickuk said:

thanks Cymruchris
yes i am carrying a balance so that’s probably why they’ve hiked it
I have read the letter more carefully and see I have the option to ‘opt out’ which will basically close my account and I will be able to pay off the balance at the current rate so that’s probably what I’m gonna do..

Yes - usually with a change they do give that option. That's probably the option they'd prefer you to take as in their eyes they're managing the risk out of the business. (As I say they don't always get it right - but they clump a large number of people under the same umbrella). It might not be a bad thing to get it down to zero and close the account with them. There are other credit cards that might become open to you eligibility wise once your balance gets down to zero (although you might not want another). 

[Deleted User]

tulipchickuk said:

thanks Cymruchris
yes i am carrying a balance so that’s probably why they’ve hiked it
I have read the letter more carefully and see I have the option to ‘opt out’ which will basically close my account and I will be able to pay off the balance at the current rate so that’s probably what I’m gonna do..

They might even offer you other options to retain the card on the call.

Ebe_Scrooge

In addition to the excellent advice given by previous posters, I would like to suggest that you head over to the Debt-Free Wannabe board and post an SOA.  Interest rates aside, if you are carrying a balance on a credit card and are unable to clear it, that is simply not sustainable in the long term.  You really do need a plan to repay the debt and make sure that you're not relying on credit to meet essential living expenses.

Please don't view this as me "having a dig" - that is not my intention at all.  Simply a rational and hopefully helpful suggestion to prevent further issues in the future - coming from someone who has most definitely "been there, done that, got the t-shirt" in the past!

tulipchickuk

thank you everyone for your advice I will definitely be taking some of it up.

GenieBoy

They put mine up too at the same time as yours but mine has only gone up to 46.5% APR although I don't have a balance and haven't had a balance for quite a while.

They are probably putting everyone's up although to different rates.

robbo990

Mine also has gone from 29.0% to 46.5%. Never carried a balance - so they've had no interest payments from me - only use it for the odd purchase to keep the card active and to spend when on holiday abroad as there are no fees.

tulipchickuk

thanks Robbo & GenieBoy; i’ve decided to close my ac and go on a pay down plan… i can have that at my old rate.