Amex refund of interest charges

ricodico

Hello, good morning all

First time poster!

Would really value some input as my mind is currently blown. This is my debt situation:-

Amex £18k

Halifax £8k

overdrafts £5k

Amex wrote to me yesterday to say that they made a mistake with their raising of my credit card limit historically and the basis of their decisions to raise my limit was wrong and that they are compensating me to the tune of £13k!!!!!!! They are also closing my account and suspending all interest on the account to to allow me to repay the remaining balance. They have already credited my card with the £13k. They have also offered to credit the £13k to my bank account if I prefer.

So to recap:-

compensation £13k

no interest on the remaining balance to clear it

can pay the £13k into my bank account

As you can imagine with this level of debt the prospect of having it lowered by £13k is huge to me. My life is so adversely affected by all this debt and servicing the payments has been hell.

Questions are:-

1. Do I take the credit to my bank account to pay off my halifax and overdrafts that are interest bearing?…instinctively I know that I should but the prospect of not having £18k on one card is tempting
2. Should I go back to Amex and ask for them to consider increasing the compensation? - their email does not state this is their final offer and does state if I am unhappy or worried I can contact them and also if not satisfied I can complain. Normally compensation offers come with caviates such as "this is our final offer to conclude this matter" "or made without prejudice" Neither are present in the letter. Hence I feel I may be able to get more. Not that I am greedy…just desperate to not be in this position!

Most of my debt has arisen from my inability to service the Amex debt.

Would really value everyone's thoughts…

Thank you so much

eskbanker

No harm in asking them for details of their calculation but I can't imagine it's negotiable as such.

Putting the £13K towards the debt with the highest interest would seem the most sensible approach…

MattMattMattUK

• In reply to your questions:

• 1 The most rational course of action is to clear the interest bearing debt first, so taking the cash and clearing the Halifax and overdraft debt, which leaves you with £18k of debt with no interest being charged. Doing anything else would be highly irrational.

• 2 Things do not normally state "final offer", that is just a tactic used by debt collection companies, it is meaningless. The offer they have made will be based on a standard formula, it will relate to the debt after the increase and interest charged on that. At best you might get a £25 "offer of goodwill". Accept it, use it tactically.

Most of my debt has arisen from my inability to service the Amex debt.

This is the most dangerous part of your post, it is factually untrue. Debt occurs because you have spent beyond your means for a sustained period of time, this kind of thinking is why people get back into debt again, they blame external factors rather than accepting that they made bad decisions, sometimes facilitated by lenders. They key to getting out of the debt and not getting into it again is accepting that you have agency and you are responsible for your choice and choosing to make better ones going forward. I am not saying this to be harsh, I am saying it because it is the cold hard reality of the psychology of debt and the only way to avoid it going forward.

ricodico

https://forums.moneysavingexpert.com/discussion/comment/81996930#Comment_81996930

Thank you so much. You are quite correct and I appreciate this is all my fault, however, the Amex letter has admitted some fault also. I really appreciate you being honest.

lr1277

I suppose my only thought with the Amex debt is if you get the £13k refund, and depending on whether you pay off the Amex debt or not:

If you use that £13k to pay off the £18k debt leaving you with a £5k debt, then I assume the £5k will remain interest free.

However if you choose to use the £13k to pay off other debts, then the Amex debt remains at £18k and will the whole of that £18k remain interest free? Was that made clear when Amex wrote to you?

Dazrama3_2

https://forums.moneysavingexpert.com/discussion/comment/81996930#Comment_81996930

I absolutely agree with the last comment about servicing debt and personal responsibility.

Though I also think affordability is something that can change unexpectedly and become more challenging. I can imagine all kinds of sudden change of circumstances - income/salary changes, home repairs, the need to buy a new car. It's difficult isn't it? Then when it gets to a point where people are relying on credit and mainly paying interest, the damage that does is really significant.

Any company applying huge unaffordble interest charges to people with high debt doesn't support people to reduce their debt - it has the oppostite effect.

I'm glad that they are working towards a solution and acknowledge their part.

ricodico

https://forums.moneysavingexpert.com/discussion/comment/81997149#Comment_81997149

Yes it was. They said they will work with me to reduce the remaining balance and all interest is ceased. Thank you for your response

MattMattMattUK

https://forums.moneysavingexpert.com/discussion/comment/81996963#Comment_81996963

It is not so much about fault, it is about agency. You have a real opportunity here to get yourself out of debt, this will clear all your interesting bearing debt and leave you with what will ultimately be a very affordable other debt due to it having zero interest applied and the fact you can probably get Amex to agree to pay it off over many years, so it will be a small monthly payment. The key thing is to understand why you overspent before and how you can make sure it does not happen again, think of it as less about apportioning blame, but making sure it does not happen again because the only person who really looses out in that situation is you and you do not want that to happen again.

ricodico

https://forums.moneysavingexpert.com/discussion/comment/81997633#Comment_81997633

Thank you so much for such good advice. I have already changed my behaviour but sometimes when our situation changes again we can be tempted to return to old over spending habits. I agree re the opportunity here and it is not wasted on me after the last 5 years! Thank you again, you have given me the reminder I needed. I have a good friend who has also said the same.