MBNA 5% Minimum Repayment. What to do?

Poosmate

Hi All,

Before you read this, the matter has now been clarified so no need to panic!

I have a credit card with MBNA (£2.8k balance). I've been paying it off slowly but surely for the past 12-18 mths (I'm not a very good card tart as I got knocked back once about a year ago and am scared to try again).

Anyway, the minimum payments are around £47 (about 1.66%) and I've been paying a little extra (£60) so although I'm often skint I can still pay all the bills and the CC's (I have another CC). I've been congratulating myself on following a lot of the advice on this site for the last 2-3 months and have started to feel really in control and getting on top of my debts.

However, the word fell out my bottom this weekend when I read a letter I received from MBNA last week regarding a change to my T&C. The new minimum repayment is going up to 5%!! This makes my new minimum repayments from June £141! So I have to find another £80 just to make the minimum repayment :eek: !

I'll be able to make payments at this rate/balance till about September. Then there's going to be defaults on my account for the first time in about 7 years! Unless I can think of something else!

I have just got a 6.3% life of balance CC from Barclays but can only transfer £600 (min repayment on that will be £15). This will bring the min repayments down to £111 from June (still £65 more than I'm paying now).

Does anyone know if this is the latest trend for card issuers, to increase the % of the minimum repayments?

If so, I don't understand the logic behind it, there must be many other people out there who are going to go from managing to being unable to pay. Ok so they wil probably get more money back quicker but surely they are going to sink even more people who just cannot absorb such a large increase.

I'm not sure whether to apply for a 0% card and hope I'm accepted with a decent enough credit limit to be able to get rid of the MBNA card altogether. I think before I do that I should ask both credit cards to reduce the credit limit on those cards so any searches will show I have less credit available to me. Would that look better or worse?

Oooh so not sure what to do!

Any advice would be gratefully received.

Thanks

Poo

Lodge

Can they do this? Sounds very dodgy to me!

suzieq

Lodge wrote: »

Can they do this? Sounds very dodgy to me!

Precisely my first thought, could be worth talking to CAB to find out where you stand. I really feel for you though Poosmate, cheeky barstewards! :eek:

Bayblue

Hello Poosmate

I can't give you a definite answer but one thing I have noticed is how long any changes on credit cards take to reach your credit file. In the past couple of months I have done a lot of shuffling debts around, closing some cards, opening a 0% one, and I have found that the info takes ages to reach my experian credit reference file, so I wonder if lowering the balance would help or not? In any case I can't see any harm in applying for a 0% card, the worst that can happen is they say no, so long as you don't apply for lots of cards because that can affect your rating badly as well.

My other suggestion would be to phone the cc card company, MBNA and explain that although you're very keen to pay and keep your good record with them this increase has affected your strict budget badly. If you've been a good customer they may well be inclined to help by maybe lowering the interest rate or something. Or am I being naive? I don't know , but it's worth a try. Also I know that moving debts around and consolidating is generally thought of a as a no no but in this case it could be of benefit, so if they don't help is there another financial institution that you're on good terms with who could, perhaps your bank or another card provider? As long as you don't take on more debt, then moving the MBNA amount to another more generous provider could work as well. Best of Luck

jak

Oh no that's terrible, you poor thing. You should call them and find out if they will reconsider. Or go to cit advice.
Good luck
X

Bismarck

Hi, is that what they've told you? are you sure it's not the lower of 5% or interest plus charges plus £10 or something like that because this debate's come up before....

If I'm wrong excuse me but your repayment may not be what you think...

NOTE : I did post this on another forum and I don't think you saw it...

please ring them and check as I've had MBNA cards for years and the key word is still LEAST...they don't want you to repay back quickly as long as they can drag out the interest and feel confident that you'll pay up!

Clariman

As Bismarck says, it is unlikely to have gone up to 5% if it is an MBNA card. They are usually £5 or £25 plus any BT fee. They have some rather fiddly wording which says "the lesser of" (or "lower of"). I suggest that you do one of two things. Call MBNA to ask them to clarify what their wording means or post the EXACT wording here and we can help.

Clariman

looby-loo_2

I think you are right - it is 5% min, I got a letter too, however, if your balance is £2.8K and you pay £60 in May then £141 in June, July, August and September you will have paid off about £600 so your balance will be £2.2K so 5% will be £111. Still a lot more than the £60 you can manage.

Lula-Hula

Hi Poosmate,

That is scary, if mine go up I'll be back to just paying minimum again . I checked my credit score with Experian & despite a 939 which is apparently good, I still got turned down for a 0 % Virgin card which scuppered my plans to balance transfer. Experian notified me 3 days later of a new search on my file ( Virgin ). Today I got a 0% offer through the post from MBNA but like you am just too scared to apply so stuck with current cards.

No harm in clarifying what they mean & if the worst is true, while you're on the phone tell them your situation & you could always suggest that you might have to contact cccs as the payments would be unmanageable.

Good luck & keep us posted
lula

mizmir

I had this letter too. My balance with them is 6.4K:eek: so I am looking at a hike from around £36 to £320!! Thankfully I have some extra money coming in next month which means I should manage it but I had hoped to pay more off my higher interest cards

Poosmate

Hi all and thanks for your responses.

Lodge and Suzieq, I hadn't thought that they couldn't do it. I mean they are giving me notice (just over a month - I got the letter last week and it takes affect from June).

Bayblue, I think I will apply for a 0% card, it's about time I started playing them again! lol I have thought about calling MBNA although I wouldn't want to let on to them that I would struggle to meet the higher payments - I'm afraid if they get even a whiff of being unable to manage, the barriers will go up and maybe be marked as risky. I was actually going to ask if they would lower the interest rate (I did with HSBC and they did! lol) but even if they did the payments would still be too high (although I'd still be saving on the interest). I only have the 2 CC's and don't have enough credit on the other one. HSBC set their minimum repayment at 2.5% putting the 2 debts together would only make the payments £10 cheaper so still too much! Eek!

Jak, I know it's terrible - I actually cried yesterday when I realised the implications of it! First time I've cried about my debts for a long time! And I thought I was sooo in control! lol

Bismark, thanks I'll have another look. I may have panicked over nothing. Oh well if I did a good cry every now and then does you the world of good!

Clariman, as per Bismark's response, I'll have another look!
Oooh Looby-loo! That's not what I wanted to hear, you burst my bubble! lol! I forgive you though.

Lula, thanks for that. I'm kind of scared to call them in case I let anything slip - the last thing I need is for the doors to start closing.

On Saturday I thought about calling them and asking if this % could be reduced because the payments would become unmanageable but, as I've mentioned, I don't want to scare them and then I thought about scaring them deliberately by mentioning CCCS and a DMP, I mean that's not in their best interest is it? I'm not sure how CCCS and DMP's work. I wondered today about asking if it was a typing error, i.e. there was a 2 missing off the front and the decimal point was in the wrong place. I guess I'm clutching at straws there though.

Thanks anyway for all your thoughts and comments. I have a lot of thinking and juggling to do, but at least I have a month or so to do it!

If anything though, I hope if anyone else who has an MBNA card has had a letter recently and sees this and re-reads the letter just in case they are in the same boat as me (The Titanic). I missed it first time round and didn't realise the implications of it so others may have too.

Regards

Poo