OFT Late Payment Fine Crack Down May Hurt Consumers!

cal

I feel that the charges although high are not really that unfair. It encourages people to handle their finances better and you do know in advance that you are going to be charged.
I have made the occassional slip in not paying the balance in full ie left just 30p on acount due to mis-typing, I have found the credit cards helpful and willing to remove the interest of £8 odd. If you are a good customer the banks are keen to keep you and will be reasonable.
We need to establish a culture of

If you can not pay the debt - do not buy the item..
Not borrow, borrow, borrow and complain when you can not meet your bills.

Most companies will be realistic if there is a genuine charge in circumstances.

Marigold123

cal wrote:

I feel that the charges although high are not really that unfair. It encourages people to handle their finances better and you do know in advance that you are going to be charged.
I have made the occassional slip in not paying the balance in full ie left just 30p on acount due to mis-typing, I have found the credit cards helpful and willing to remove the interest of £8 odd. If you are a good customer the banks are keen to keep you and will be reasonable.
We need to establish a culture of

If you can not pay the debt - do not buy the item..
Not borrow, borrow, borrow and complain when you can not meet your bills.

Most companies will be realistic if there is a genuine charge in circumstances.

I actually agree with this. I always pay my cc.s by dd, (in full every month except for my 0% cards), and unless something goes drastically wrong with my bank, or there's been confusion setting up the dd, (as there sometimes is), there's no reason for me to miss payments. If something does go wrong and it's clear it's not been my fault, the cc company has always been willing to refund the charge. This has been the same on the rare occasion that I've gone over my spending limit for some reason. I always offer to pay the difference immediately, plus a bit extra to cover any other spending till the end of the month, by switch, and ask if they could see their way to raising my limit a bit. On the infrequent occasions it happens, this has always worked.

My rules - try to stay aware of your balances, put payments dates in a diary, and if you do get it wrong always call them and offer to put it right if you can, and don't forget to ask if the fee can be waived just this once. If they say no, ask them if they wouldn't mind checking with their supervisor or line manager and see if it might be possible. Being friendly and polite always helps.

cport80

I think it's a good idea. It's not as though we're trying to not pay them back (in most cases). I have in the past forgotten to get the payment off during a busy period and I don't think the bank deserves an extra £25 just because I go past the deadline by a day or two.

It would be much fairer if they charged a small amount per day (like libraries do for books). Then the level of charge is proportionate to the level of priority the individual gives to making the payment.

TMFTP

I missed a payment deadline as:

1 - the website (for instant payment) was down, so
2 - I rang to make the payment, but clearing funds (despite paying by debit card) takes up to four days. Of course, on the phone they didn't inform me that this would result in a charge.

I've rung to query the charge - interested to see what they say...

Wig

I think the charge is unfair, on top of the charge they also charge you for all the interest during the interest free period, so they do not incur any loss whatsoever and they actually make a profit of the amount of the late payment fee. As someone said above they don't send out a default letter (which in reality would only cost them 1 pound maximum), it is all controlled by computer and the fee added along with the interest to your next statement - doesn't cost them a penny!

I think the proportion of people who have 0% deals is probably quite low, in other words the card tarts are a minority. I think it is perfectly fair to have a 0% period which reverts to std %rate if you miss a payment. If you don't like it, don't borrow more than you can afford.

Something I think is far more important than any of this is to do what Germany has done and put a limit on the max % rate that can be legally charged by loan companies.

Joe_Bloggs

I agree with Wig, in part, but I had to read the post five times to get a vague insight into it's meaning. There are traps beyong those of late payment such as paying the full amount - 1 penny. This may trigger some card companies to do the unspeakable act of continuing to charge you interest on the original amount as if you had payed nothing . Surely a proportional charge is justified.
J_B.

roversbabe

cport80 wrote:

It would be much fairer if they charged a small amount per day (like libraries do for books). Then the level of charge is proportionate to the level of priority the individual gives to making the payment.

I totally agree - this would be much fairer

MarkyMarkD

dag wrote:

I'm of mixed opinion on this one. Correct me if I'm wrong, but credit card companies have never been able to enforce these late payment fines through the courts. Except in cases where they've won by default, because the debtor hasn't done anything to challenge them at all.

However - many people cough up because they think it's easier and simpler - and they get the money by borrowing elsewhere. I don't think that should be allowed, personally.

But I'm all in favour of clearer and fairer interest charging too.

Dag - you got that 100% the wrong way round. The only two cases where lenders have NOT been able to recover such charges in court are where the lenders didn't turn up, and the borrower won by default*.

I agree with Martin - strongly! Banking is a business and banks have to make money somehow. If it's not through penalties on incompetent customers, it will be through worse credit interest rates and worse debit interest rates for the majority of competent customers.

People may think cross-subsidy is wrong, and that the stupid shouldn't subsidise the MSEs, but in that case the whole concept of this board is pushed into obsolescence.

If people saw penalties as a warning against managing their finances badly, and acted on that warning, they wouldn't ever be charged a significant amount in aggregate.

(*NB in all the above, I exclude the case of North London Securities, who were just an awful lender and mis-sold left right and centre to the couple involved in the recent court case. This is the only exception I am aware of where the lender defended the case and still lost.)

Walletwatch

And let us not forget that YOU sign on to these when you commence your relationship - if you then start contesting these charges once you start incurring them, you in effect, either come across as negligent for confirming agreement of the T&Cs without having read them, or foolish to have signed it in the first place, inspite of not agreeing with them.

Forget the legalese and cases precedent, you either can take advantage of the T&Cs, and make money from these 0% offers, or wage a moral battle against unjust T&Cs (which is not the focus of this particular site IMHO) - you can definitely not do both...

Tim_L

You can do both.

I've been doing 0% offers for about 3 years, and manage my money very carefully, but I don't agree with these charges on principle. They don't reflect the actual cost to the card issuer of a missed payment or other problem, either in terms of issuing a reminder or in terms of increased risk of loss.

They're nothing more than a means of extracting money from users presenting themselves as a soft target, and unfortunately the users they will tend to extract money from are those who are already in some sort of financial difficulties and/or who don't manage their money as actively as some of us - this is particularly the case with unauthorised overdraft fees.

They are simply wrong, and should be eradicated, even if this costs some of us a little money in terms of less generous promotional deals. Saying that "well, they should manage their money better" does smack to me of an attitude heading somewhat in the direction of "Are there no workhouses?" Just because they don't necessarily affect me doesn't mean I can't have some degree of concern for the effects they have on other people.

I might add that I have on one occasion (due to a cocked up transfer by another issuer) been hit by one of these charges by Halifax, despite having phoned up two days beforehand when I'd realised the mistake had been made and explaining that a BACs transfer was on the way, and which ultimately arrived one day after the payment deadline. I did eventually get this repaid, but no sensible organisation would place a penalty on its customers in this sort of situation. Even if you don't accept that it is wrong in principle, it's absolutely pathetic customer relations.