Is it worth complaining about interest rates?

MDE

Dear all,

I have a CC with Virgin and a CC with Egg. Both have money owing on them, a roughly equal amount on each.

However, I recieved a letter last week from Virgin, advising me they are raising my interest rate for purchases, balance transfers and cheques to 27.9%, but the typical APR quoted on their website is much lower.

I have just got a Barclaycard LoB card, and have made a transfer (after getting the letter) to the maximum amount allowed, but as a new card, it has a much lower limit than my balance. I've also transferred some of the Virgin card to Egg, as part of a 3.9% balance transfer deal they have offered me, within the limit of my credit limit, but this still leaved me with some on my Virgin card.

Egg charge my 17.9% APR, pretty close to their typical APR according to their website, but the 27.9% APR Virgin want to charge me is hugely above the typical APR they quote.

I have put together the following letter:

***********************************************

Virgin Credit Card,
Reference RVM052,
Freepost NATE 744
Chester
CH4 9BR

Sunday, April 27, 2008


My Address

Dear Sirs

Re: MasterCard Account number: **

I write regarding my Virgin MasterCard, as noted above, and with reference to your letter RVM052, dated April 2008.

In this letter, you have informed that that, as of my May 2008 statement date, my interest rate is to be increased to 27.9% PA.

Having checked your website, I note that the average APR is 15.9% APR, some 17% below the APR which you now wish to charge me.

I am at a loss to understand why you are increasing my interest charges. I believe I am a good credit risk, and an established customer of Virgin Money, yet it would seem you are prepared to offer better deals to a new customer than to an established customer.

I would draw your attention to the following:

• I have been a customer of Virgin Credit Cards for a number of years
• I have never missed a payment with Virgin Credit Cards, or indeed any other financial provider
• I have a significant outstanding balance with Virgin Credit Cards, upon which you are making money every month.
• I have a good credit score with both Equifax (821/ 1000) and Callcredit (919/1000) credit reference agencies.
• I am prepared, and indeed have the facility on other cards, to close my account with Virgin Credit Cards and transfer the balance to another provider.

I hereby request that my interest rate be reviewed and lowered, in line with the typical APR advertised to new customers.

I look forward to a full and prompt response to this letter and for the matter to be concluded within eight weeks or I shall consider contacting the Financial Ombudsman to investigate my concerns.

Yours Sincerely,




My Name

***********************************************




Do you think I will get any joy from this complaining action?

jonesMUFCforever

Your credit score with anyone is irrelevant.
Do you really have the credit available to transfer from Virgin?

If so why have you not used it?

You must be perceived to be a high risk to Virgin hence the increase in rate.
Your letter may do some good it may not.

lolo06

that is ridicoulsy high, i called hsbc yesterday and threatned them to leave and do a balance transfer if they dont reduce my interest. they were charging me 20.0% APR i managed to get it down to 17%.
Worth a try.

MDE

Sorry if this seems argumentative, but how can my credit score be irrelevant? This is what companies use to assess the risk, and, as you have said, Virgin evidently percieve me to be a risk when my credit score indicates otherwise.

Yes I do have the credit available to transfer from Virgin- but it's a case of preferring to keep 2 cards with spare capacity for emergencies, rather than one card which is running at a maximum.

YorkshireBoy

MDE wrote: »

Having checked your website, I note that the average APR...

It's not an average APR...it's their typical APR (which is given to 66% of all successful applicants).

is 15.9%some 17% below the APR which you now wish to charge me.

There's something wrong with your maths here isn't there?

it would seem you are prepared to offer better deals to a new customer than to an established customer.

That's business! 0% (and other low rates) are loss leaders designed to hook you and draw you in.

I have a significant outstanding balance with Virgin Credit Cards, upon which you are making money every month.

It's the 'significant' that may be bothering them (or rather their computer-based risk tools). Whilst they are receiving income from the capital they have lent you, it sounds like they now perceive there to be a risk to the capital itself. So, they're going to get what they can while they can...just in case you default.

I have a good credit score with both Equifax (821/ 1000) and Callcredit (919/1000) credit reference agencies.

Totally irrelevant what the CRA's think of you...they aren't lending you money! The only score that matters is that which MBNA have assigned you.

I am prepared, and indeed have the facility on other cards, to close my account with Virgin Credit Cards and transfer the balance to another provider.

They'll know you're bluffing here, because nobody chooses to stay with/negotiate with MBNA on 27.9% APR when they have spare credit and a cheaper rate elsewhere. Whilst they may not say it, they will be thinking 'go on then'.

I look forward to a full and prompt response to this letter and for the matter to be concluded within eight weeks or I shall consider contacting the Financial Ombudsman to investigate my concerns.

Variable interest rates are of no concern whatsoever to the FOS. I don't believe they will entertain any complaint from you.

MDE

Lucky I haven't posted it yet.

Revised version.....

I write regarding my Virgin MasterCard, as noted above, and with reference to your letter RVM052, dated April 2008.

In this letter, you have informed that that, as of my May 2008 statement date, my interest rate is to be increased to 27.9% PA.

Having checked your website, I note that the typical APR is 15.9% APR, some 12% below the APR which you now wish to charge me.

I am at a loss to understand why you are increasing my interest charges. I believe I am a good credit risk, and an established customer of Virgin Money, yet it would seem you are prepared to offer better deals to a new customer than to an established customer.

I would draw your attention to the following:

• I have been a customer of Virgin Credit Cards for a number of years
• I have never missed a payment with Virgin Credit Cards, or indeed any other financial provider
• I have a significant outstanding balance with Virgin Credit Cards, upon which you are making money every month.
• I have a good credit score with both Equifax (821/ 1000) and Callcredit (919/1000) credit reference agencies.
• I am prepared, and indeed have the facility on other cards, to close my account with Virgin Credit Cards and transfer the balance to another provider.

I hereby request that my interest rate be reviewed and lowered, in line with the typical APR advertised to new customers.

I look forward to a full and prompt response to this letter and for the matter to be concluded within eight weeks or I shall consider contacting the Financial Ombudsman to investigate my concerns.

MDE

YorkshireBoy wrote: »

It's not an average APR...it's their typical APR (which is given to 66% of all successful applicants).There's something wrong with your maths here isn't there?That's business! 0% (and other low rates) are loss leaders designed to hook you and draw you in.It's the 'significant' that may be bothering them (or rather their computer-based risk tools). Whilst they are receiving income from the capital they have lent you, it sounds like they now perceive there to be a risk to the capital itself. So, they're going to get what they can while they can...just in case you default.Totally irrelevant what the CRA's think of you...they aren't lending you money! The only score that matters is that which MBNA have assigned you.They'll know you're bluffing here, because nobody chooses to stay with/negotiate with MBNA on 27.9% APR when they have spare credit and a cheaper rate elsewhere. Whilst they may not say it, they will be thinking 'go on then'.Variable interest rates are of no concern whatsoever to the FOS. I don't believe they will entertain any complaint from you.

Thank you for your response. I have corrected the errors in my letter.

However, I have a couple of questions:

1. Why would Virgin be labelling me high risk when Egg are charging me the typical APR (+1%)?
2. You mention the score that MBNA have assigned me. Could you clarify this- is there a private scoring system they use?
3. My understanding is that the FOS have an interest in ensuring that the majority of customers are offered the typical interest rate advertised. As I do not have an adverse credit history there is no reason why I should not be part of this "majority"- correct?

Also just a couple of things to point out:

1. "Significant" is about £5000. A lot less than many people.
2. The risk of me defaulting is low- I am employed full time in a professional job with rising salary increments every year.

Thanks,

MDE1982

YorkshireBoy

Other posters have reported successfully lowering their rates with a phone call. Maybe you should do the same first, before sending (empty threat, ie the FOS mention) letters. I suggest you ring their retentions department directly on 0800 783 1116 during office hours. Be polite...be reasoned...don't make threats...and see what they can do for you.

YorkshireBoy

MDE wrote: »

Why would Virgin be labelling me high risk when Egg are charging me the typical APR (+1%)?

They have different risk models?

You mention the score that MBNA have assigned me. Could you clarify this- is there a private scoring system they use?

All lenders use their own scoring models. Very rarely (if at all) do they buy an Experian or Equifax score. All MBNA get is raw data, and they interpret it there own way...which maybe different from the way that Egg interpret it.

My understanding is that the FOS have an interest in ensuring that the majority of customers are offered the typical interest rate advertised.

There are guidelines (although not issued by the FOS) to do with 'take up', but the FOS won't get involved with lenders' 'pricing for risk' assessments of their existing customers.

MDE

I cancelled the insurance recently on this card. You think this might be a related factor to the increase?

overlander

Its nothing to do with risk models and more about screwing as much money out of you as possible. Virgin credit cards are the pits and unless its their 0% deal they have nothing going for them. They tried that stunt on me, they upped my APR from about 17% to 34.9%. I phoned them up and paid the 9K balance off and closed my card down. Ohh yeah they offered to put the APR back down if i never closed the card, so after one call i was no longer a poor risk. Give me a break Virgin/MBNA are shysters and heed my advice and stay well away from them. Just imagine the position upping the APR by that amount could do to some people who are just managing their card,, it could push them over the edge, now thats a responsible company.