Virgin CC keep increasing my interest rate

rosan_2

Hi everyone

I'm new to the forums so firstly let me say hello to you all.

About 2 years ago I got a credit card with Virgin at a fantastic interest rate of only 10.9%. They have steadily kept on increasing my interest rate and I got a letter from them yesterday saying it is going up to 34.9% from May. It was bad enough when it reached 29.9% but I could just about handle the repayments and pay extra. Now I'm worried that it's going to spiral out of control. The balance owed on the card is about £1400.

I have applied for other credit cards so I could balance transfer but have been turned down. I have 2 other credit cards with good interest rates that haven't changed since I took them out, around the same time as the Virgin card. I can't balance transfer to the other 2 cards I have because I'm already at my limit on them.

Is there any advice anybody can give me on this as I'm really worried about the whopping interest rate increase.

Thanks in advance.

blueye

they did the same to us we have spare credit on other cards though so are going to move it, have you tried calling and asking them to reduce it they might do it if you have a good account history.
have you tried to get an overdraft with your bank i know its not a good thing to do but atleast the interest would be cheeper

bethanyrayne

rosan wrote: »

Hi everyone

I'm new to the forums so firstly let me say hello to you all.

About 2 years ago I got a credit card with Virgin at a fantastic interest rate of only 10.9%. They have steadily kept on increasing my interest rate and I got a letter from them yesterday saying it is going up to 34.9% from May. It was bad enough when it reached 29.9% but I could just about handle the repayments and pay extra. Now I'm worried that it's going to spiral out of control. The balance owed on the card is about £1400.

I have applied for other credit cards so I could balance transfer but have been turned down. I have 2 other credit cards with good interest rates that haven't changed since I took them out, around the same time as the Virgin card. I can't balance transfer to the other 2 cards I have because I'm already at my limit on them.

Is there any advice anybody can give me on this as I'm really worried about the whopping interest rate increase.

Thanks in advance.

You're not the first to post about Virgin increasing rates. Either, Richard is a bit strapped for cash or this is how they're funding their 0% deals for the stoozers on this forum.

LilacPixie

The had did the same with me. i was origianally 13.4% which wasn't the best but was a decent rate but last week they wrote informing me they were increasing it to 34.9% from 1st May 08. I called them but despite never missing a payment they would not budge.

I called Capital one as i have an old card that i have never gotten around closing and asked about a balance transfer to that and they have offered me 0% bal transfer until novermber 09 with no transfer fee.

I have just over £600 to transfer so I will do that and then just attact the balance while on 0%.

Virgin card is getting closed.

Good luck contacting thm for a better deal.

bethanyrayne

LilacPixie wrote: »

I called Capital one as i have an old card that i have never gotten around closing and asked about a balance transfer to that and they have offered me 0% bal transfer until novermber 09 with no transfer fee.

Are you sure it's Nov 09 and not 08 because that seems too good to be true with no fee as well.

YorkshireBoy

bethanyrayne wrote: »

Either, Richard is a bit strapped for cash or this is how they're funding their 0% deals for the stoozers on this forum.

Neither is true.

MBNA underwrite the card, and they are simply pricing for risk to protect their money...it's nothing to do with Mr Branson (or stoozers ).

If you're incurring interest, yet only making the minimum payments they, more specifically their 'systems', assume (especially with the way they calculate the minimum payment) you're struggling.

They then conduct 'ad-hoc' searches of your credit file and, once they see the 'full picture', adjust your rate accordingly.

bethanyrayne

YorkshireBoy wrote: »

Neither is true.

MBNA underwrite the card, and they are simply pricing for risk to protect their money...it's nothing to do with Mr Branson (or stoozers ).

If you're incurring interest, yet only making the minimum payments they, more specifically their 'systems', assume (especially with the way they calculate the minimum payment) you're struggling.

They then conduct 'ad-hoc' searches of your credit file and, once they see the 'full picture', adjust your rate accordingly.

Seems like an excellent way to INCREASE the risk of a default to me.

Self fulfilling prophecy springs to mind.

LilacPixie

bethanyrayne wrote: »

Are you sure it's Nov 09 and not 08 because that seems too good to be true with no fee as well.

November 09 i was told, they are sending me out a letter to sign and return, my thought were hmm 18 months give or take for a balance transfer sounds too good a deal to turn down.

I'll keep you posted when i get the paperwork

YorkshireBoy

bethanyrayne wrote: »

Seems like an excellent way to INCREASE the risk of a default to me.

'Get as much (back) as you can while you can' would be my assessment.

Self fulfilling prophecy springs to mind.

If it's there to be taken I'll take it (if you mean what I think you mean. )

nickmack

YorkshireBoy wrote: »

If you're incurring interest, yet only making the minimum payments they, more specifically their 'systems', assume (especially with the way they calculate the minimum payment) you're struggling.

They then conduct 'ad-hoc' searches of your credit file and, once they see the 'full picture', adjust your rate accordingly.

If you're paying the minimum each month, you're probably either lazy or struggling somewhat.

Assuming your credit file only contains a few additional searches and no other significant activity, as long as you don't start missing payments, I don't think MBNA would class you as a high risk. You're a good moneymaker for them as long as you keep incurring interest and only chipping away at the actual balance.

I think MBNA are treading a fine line between greed and risking customers defaulting. As bethanyrayne says, increasing the rate can only up the chance of customers defaulting.

They've obviously weighed up the situation and decided it's worthwhile increasing rates for those with outstanding interest incurring balances compared to the cost for them of those it may push over the edge.

These rate increases are purely MBNA pushing the boundaries of what they can get away with to maximise profit. Whilst MBNA are perfectly entitled to exercise the discretion of a variable rate as contracted, their responsible lending model leaves alot to be desired.

YorkshireBoy

nickmack wrote: »

Assuming your credit file only contains a few additional searches and no other significant activity, as long as you don't start missing payments, I don't think MBNA would class you as a high risk.

That's true Nick, but I'd wager that, in the main, those who have had their rates increased up to 34.9% APR are heavily indebted elsewhere (as seen from the search) - and I include stoozers in that as well because my wife's rate was increased to 29.9% as she approached the end of a follow on 0% offer on MBNA - and that's why they've been deemed high(er) risk.

You're a good moneymaker for them as long as you keep incurring interest and only chipping away at the actual balance.

Not so if all they'll get back is interest. They're being spooked because they, or more accurately their 'systems', perceive a significant risk to capital.