MBNA hike interest rates

jimbo26

There are money posts appearing concerning the huge hike in interest rates, predominately on cards managed by MBNA.

These are the same cards favoured by stoozers due to the long 0% deals and high limits.

Is there a link? Are non-stoozers paying the price? After all MBNA are in the business of making money.

Moggles_2

The short answer is yes. MBNA is not there to help you and me. It's there to make a profit.

That said, you don't have to be a stoozer to benefit from these 0% balance transfer deals. Used sensibly, they provide a cheap, short-term loan.

It's important to realise that the standard rates quoted by almost all card companies are not fixed (like some promotional offers). They're variable. That means the lender can raise the rate at any time.

If you've benefitted from 0% on balance transfers for 12-15 months, you cannot realistically expect the card company to continue lending money at a loss-leading rate.

12-15 months is more than enough time, I would have thought, to shift any balance remaining to another 0% or low-rate BT card, as Martin advises. Unless you're prepared for this then, as sure as night follows day, it will cost you, whichever card you happen to have.

Moggles_2

MBNA has some of the best introductory BT deals on the market but, - and this is crucially important - if you're not prepared to "ditch and switch" before the 0% period ends, then I would steer clear of these deals altogether.

Better to go for a "stable relationship" card, as Martin advises. (Please see *Best Balance Transfers*) http://www.moneysavingexpert.com/cards/balance-transfer-credit-cards

jimbo26

I think the danger of switching to MBNA is if you are struggling and might not be able to balance transfer at the end of the deal. You run the risk of having to stay with MBNA at the very high rate.

If your are struggling then think very carefully before being lured into the MBNA 0% offer. A LOB may be better in the long term.

Moggles_2

Exactly. If you will have savings to pay off your balance by the time the 0% period expires, that's great. The risk in borrowing this way is that you can't be sure of another 0% credit card offer with a sufficient credit limit when your current deal ends and the interest rate leaps to anything from 16.9% to 34.9% APR variable. For all we know, 0% BT deals may not be around in 12 months time and BT fees could have jumped to 5% or even 6% :eek:

The reason the card providers can afford to lend us money at 0% for X months is because, more often than not, customers do not clear the debt and end up paying crippling interest when the promotion period ends. This is the main way lenders claw back the cost of these promotions. If this were not the case, these 0% offers would have dried up long ago.

mhifoe

jimbo26 wrote: »

I think the danger of switching to MBNA is if you are struggling and might not be able to balance transfer at the end of the deal. You run the risk of having to stay with MBNA at the very high rate.

If your are struggling then think very carefully before being lured into the MBNA 0% offer. A LOB may be better in the long term.

This is a very important point.

I have had an MBNA platinum for a few years with an APR of 6.9%.
Last year they increased the rate to 12.9% and then upped it to 21.9% this month.

I have paid it all off and will be moving to an alternative credit card in due course, but people with credit problems may be stuck on these extortionate rates. 30 days is quite tight to pay off a large credit card balance, especially if you have to apply for a new card. People who take out an MBNA card should be prepared for them to up the rate at any time to 30% or more.

CannyJock

Lots of posts where MBNA offer repeat offers once balance is cleared, always worth asking for this before deciding to cancel them.

Read this article written by Clariman if in doubt: http://www.makesenseofmoney.co.uk/a_extend.html