Letter from Virgin - interest rate up and minimum payment increased!

spaceman99

Had a letter from Virgin yesterday. They are increasing the rate of interest on the card to 17.9%.

Worst of all though, they are upping the minimum payment to 5% of the outstanding balance!! I feel this is rather extreme.

I have about £6k outstanding - by paying off £200 I was paying a fair amount above the minimunm payment; with the rise to 5% I will need to fork out around £300 a month just to cover the minimum payment!

Do people think this (5%) is a high amount for a minimum payment?

Is this just Virgin's way of combating the effect of the credit crunch i.e. it will recover their money quicker and also discourage people from spending more?

Paula77

No, it's probably so that they can make more money to but NR

To be honest I don't know what is going on with these Banks anymore?? I know that they have been slammed for giving out credit far too easily, by us, FSA and many more places, so now they are saying that they are being socially responsible.

You just can't win

Bismarck

Hi, it's a bit more complex than this.

The Virgin/MBNA minimum payment is a different beast to most others.

It's odd and hard to get you head around sometimes but pretty much it's the lower of 5% of the balance or the interest frfom the statement plus, I think £5 or £10. That's my take on it anyway.

I don't think Virgin are coppering up just yet to get Northern Rock...this is more the standard MBNA system.

spaceman99

Oh right - thanks for this - i'll have to read the letter again to make sure.

I don't really want to be shelling out £300 a month if I can help it. I prefer to pay a fixed amount (instead of minimum payment) but I'll need to be careful, as if I misinterpret their new minimum payment conditions I could end up fixing an amount below the minimum payment, and then they'll have me right where they want me :mad:

Bismarck

Yeah...amidst the mass of stuff I got on regular basis the MBNA minimum payment always seemed odd ciompared to the others until this problem came up with the hike in the interest rate charges. You need to keep a careful watch on them or your rate will soar...some would dsay you're doing well at 17.9%....if you underpay or are late you could end up on 34.9%....