Barclaycard Persistent Debt situation

true_blue_2

Hi all,

I have had a Barclaycard since 2018, kept it fully paid on time every month, as I have with all my debts, but early last year (Jan-Apr 2023), they told me they were suspending it because I was in persistent debt, so I told them I didn't want it suspended and reminded them that I've never missed or made a late payment. They insisted it had to be done because of FCA regulations, but I told them that my other cards haven't done this, so I disagreed and protested it. I made a complaint, which came to nothing, and they said I'll be put onto a "Pay down plan", and that when my balance is paid, the account will be reviewed again.

Then in December 2023 I paid off the balance in full, and I left it as it was, to my regret, I should have closed the account there and then. But I did not, and about a week after a yearly subscription charge was put on the card, they wrote to me telling me that they've reviewed the account, and it will be closed. 

I protested and complained again, telling them that I have done nothing wrong and never missed a payment etc. But they said that the team have reviewed it and still consider me at risk of re-entering PD. Again, they mentioned it's not because of their own policies, but because of the new FCA regulations, and again, I told them I had 4 other credit cards who haven't done this, so I don't believe that!
I also bank with Barclays, and my current and savings accounts are both healthy and contain more money in them than the limit on my Barclaycard, and all my other debts have been paid too, which was reflected on my credit file before they decided to close the account, so I can't understand how they still consider me to be at risk of PD. 

It's worth mentioning that a few weeks before they closed the account, I did message their chat agents about interest rates, and asked if it was possible to lower them, and stated that otherwise it was not worth me keeping the card. So I don't know if it's just my paranoia, but I feel like they could have taken this into consideration while they reviewed my account status. I feel like they may have discriminated me, because my girlfriend, who happens to work at Barclaycard for over 15 years, said the whole thing is strange the way they've treated me, and that she's not heard of anyone being dealt with such disregard. We both feel like there is something they're not mentioning which has been considered against me. I have not mentioned discrimination to them, because I like to get my facts right before I make accusations. Could it be something to do with the area I live in, the state of my family member(s) credit files(s), or the fact I requested lower interest rates only a week beforehand? My girlfriend, who works for them in a different department, says no, but who knows how they work things. But it's upset me, the way they have waited for me to pay the balance off before essentially sh**ting on me like that!

My complaint has come back as not upheld by Barclaycard, and they said the decision is final, and that I can't apply for a Barclaycard again for 6 months. But I am worried about how this affects my credit file? Will a forced closure of the account look bad on there? If so, why the hell would they do this to me when I've been a good customer? 

I also want to know if there are any grounds for appeal to the FOS which I may not be aware of? I couldn't care less about having a Barclaycard, or any of their other products, but I do not deserve to have a permanent negative on my credit file.

Does anyone have advice or knowledge which could help me?

Cheers!

prettyandfluffy

When you say you "kept it fully paid on time every month" how much of the balance were you paying? All of it, the minimum or something else? Also were you paying by direct debit or making a manual payment?

eskbanker

true_blue_2 said:

I have had a Barclaycard since 2018, kept it fully paid on time every month, as I have with all my debts, but early last year (Jan-Apr 2023), they told me they were suspending it because I was in persistent debt, so I told them I didn't want it suspended and reminded them that I've never missed or made a late payment.

'Fully paid' in the normal sense of paying the balance off in full every month?  It would be more understandable to regard the account as being in persistent debt status if you were only making minimum repayments....

Brie

For them to consider that you had "persistent debt" would mean that you had a perhaps significant balance but were only paying the minimum each month.  It is true that the FCA has been pushing card companies to "assist" their customers deal with debt in a proactive way rather than just sitting back sipping their mojitos and raking in excessive amounts of interest.  

I agree with your girlfriend that it's unlikely to have been flagged on your account if you enquired about interest.  If you'd asked them to put interest on hold and they agreed - well yes that would be flagged as that would be an action within the IT system rather than just a chat with someone.  

A bank, like any company, can decide who they want to deal with and have as a customer.  Being in persistent debt isn't a good look for a bank so that's likely why they cut you loose.  It would only be discrimination if they did it and targeted all their black customers, or the women ones.  If it is one black customer out of thousands of white people who had their cards stopped then that wouldn't be discrimination. 

So the only thing that is left is the yearly charge for the card (for what??).  Did you get that back given that they immediately shut the account?  I would think that should be challenged if you didn't get it back given that they likely had you on a review list to shut before the charge was applied.  If that isn't refunded then that's something I would take to FOS.  

km1500

not sure - it is only a suspicion - but mentioning that you had four other credit cards might not have helped!

born_again

What is persistent debt?

If you have received a letter from your lender saying that you are in persistent debt, this means that in the last 18 months the amount you have paid in interest, fees and charges is bigger than the amount of borrowed money that you have paid back. This is more likely to happen if you are only paying the minimum payment, or not much more than this.

Clearly OP was not clearing balance in full, of PD is never going to be a issue.

Pointless appealing as it is a FCA regulation they have followed.

true_blue_2

Thanks all. I was paying the recommended monthly payment and my balance was slowly coming down, the same as it was with my other cards.

How negatively will this affect my file if they've forced this closure?


Cheers

true_blue_2

Brie said:

For them to consider that you had "persistent debt" would mean that you had a perhaps significant balance but were only paying the minimum each month.  It is true that the FCA has been pushing card companies to "assist" their customers deal with debt in a proactive way rather than just sitting back sipping their mojitos and raking in excessive amounts of interest.  

I agree with your girlfriend that it's unlikely to have been flagged on your account if you enquired about interest.  If you'd asked them to put interest on hold and they agreed - well yes that would be flagged as that would be an action within the IT system rather than just a chat with someone.  

A bank, like any company, can decide who they want to deal with and have as a customer.  Being in persistent debt isn't a good look for a bank so that's likely why they cut you loose.  It would only be discrimination if they did it and targeted all their black customers, or the women ones.  If it is one black customer out of thousands of white people who had their cards stopped then that wouldn't be discrimination. 

So the only thing that is left is the yearly charge for the card (for what??).  Did you get that back given that they immediately shut the account?  I would think that should be challenged if you didn't get it back given that they likely had you on a review list to shut before the charge was applied.  If that isn't refunded then that's something I would take to FOS.  

The yearly charge was for a IONOS subscription, but if the card was suspended, I'm not really sure how they allowed it to be charged, and then it felt like they used that as an excuse to close it. I think one of their agents also mentioned that because of that charge, it has triggered the review. 

eskbanker

true_blue_2 said:

Then in December 2023 I paid off the balance in full, and I left it as it was, to my regret, I should have closed the account there and then. But I did not, and about a week after a yearly subscription charge was put on the card, they wrote to me telling me that they've reviewed the account, and it will be closed. 

[...]

It's worth mentioning that a few weeks before they closed the account, I did message their chat agents about interest rates, and asked if it was possible to lower them, and stated that otherwise it was not worth me keeping the card. So I don't know if it's just my paranoia, but I feel like they could have taken this into consideration while they reviewed my account status.

Seems to me that if you told them it wasn't worth keeping the card if they didn't lower rates and they declined to lower the rates, it's not unreasonable for that to influence their decision to exercise their prerogative to close your account.  It might seem unfair but if you'd paid the balance off in full and left the card at zero, why were you seeking lower interest rates, a request that could indeed imply that you'd be planning to run up debts again?

true_blue_2 said:

why the hell would they do this to me when I've been a good customer?

Customers going into persistent debt status aren't good customers though - many perceive that they are because they're paying interest, but the flip side is that the risk of defaulting is much higher.

true_blue_2 said:

But I am worried about how this affects my credit file? Will a forced closure of the account look bad on there?

No, the reason for closure isn't shared with credit files to the best of my knowledge.  The scores invented by the credit ratings agencies are influenced by any sort of change, so you'll see a lower number for a bit, but that's the same as if you'd chosen to close the account, and the scores are meaningless anyway, as they're not seen by prospective lenders....

Graham4464

true_blue_2 said:

Thanks all. I was paying the recommended monthly payment and my balance was slowly coming down, the same as it was with my other cards.

That amount on your monthly statements isn't 'recommended'  - it is the minimum monthly payment. Just paying this amount can cause banks to invoke the mandatory PD policy. Over time, if you are also doing this with your other credit cards, it may also give your other providers the jitters about your ability to pay/affordability and they may invoke their PD policy as well.

Hereabouts,  the reccommended monthly payment is to clear the balance entirely. That way you will pay no interest and demonstrates to the CC providers you are using your card accounts well.

eskbanker

Graham4464 said:

true_blue_2 said:

Thanks all. I was paying the recommended monthly payment and my balance was slowly coming down, the same as it was with my other cards.

That amount on your monthly statements isn't 'recommended'  - it is the minimum monthly payment. Just paying this amount can cause banks to invoke the mandatory PD policy.

It depends on exactly what OP is referring to - you're right that the contractual minimum repayment is the one prominently shown on all credit card statements, which will eventually trigger the persistent debt process, but once that reaches a certain point, card providers will sometimes recommend a higher repayment in order to make more meaningful inroads into longstanding balances, so 'recommended' may not equate to 'contractual minimum'.

https://www.moneysavingexpert.com/credit-cards/persistent-debt-help/
https://www.fca.org.uk/publication/policy/ps18-04.pdf