MBNA 5% Minimum Repayment. What to do?

Poosmate

Mizmir, I am about to re-read the letter I got, just in case I and a few others are reading it wrong. (fingers crossed)

I really can't understand how they can change it from 1.66% to 5% it's just so counter-productive.

Unless of course, they are in trouble and are deploying "Northern Rock" tactics by pricing themselves out of the market, so to speak, to offload their "assets" and recoup the cash faster because they know those that can will move their debt somewhere else. Hmmm just a thought......

Poo

mizmir

Good luck trying to find a way around it. It is such a big increase - I so want to get rid of MBNA once and for all and close my account. :mad:

And thanks for warning people - I think a lot of people may have had that letter and not realised.

Poosmate

ok, I got the exact wording here:-

"if the balance shown on your statement is more than £10, it will be whichever is the least of 5% of the statement balance or the total of any Payment Protection Cover charges, interest, handling fees and default charges plus £5, provided that it will always be at least £10."

Oh dear! Oh dear!

Quick everyone take the money and run! Oh I mean give back the money and run!

Seriously though, it is scary! I've never had this happen to me before and to be honest I've never really looked too hard at the changes of the T&C. I shall do in future!!!

Can I please ask people to keep this thread "up there" just in case others haven't realised about this? It could be the difference between people sinking and swimming - it is in my case. Sometimes, it only takes one default and charges to start a snowball which just can't be stopped! I'd have the money to cover June's payment but it would have left me so desperately short - I mean, if I'd had a spare £80 I'd have been paying it off already!

Thanks again all,

Poo

divorcingjack

Morning Poo!

To me this reads that your minimum payment will be £10??

'it will be whichever is the LEAST of ..."

I've got an MBNA as well, as this is certainly how I'm taking it. I'm sure more experienced DFW's will be along later, but I wouldn't stress too much until you get confirmation.

Keeping my fingers crossed that I haven't got your hopes up unnecessarily.

Have a nice day

dj

Sheepy1209

I got this change in T&C a few months ago - and the minimum remained at interest + £5, i.e. a lot less than 5%.

However, and it's a big however, MBNA have been pushing interest rates up to 35% in many cases, :mad: which will a) make the minimum repayment MUCH bigger and b) make it virtually impossible to pay off.

If you can, get as much of this balance transferred as possible, as soon as possible.

You have been warned!!!

Clariman

Poosmate wrote: »

ok, I got the exact wording here:-

"if the balance shown on your statement is more than £10, it will be whichever is the least of 5% of the statement balance or the total of any Payment Protection Cover charges, interest, handling fees and default charges plus £5, provided that it will always be at least £10."

Oh dear! Oh dear!

Calm down everyone.. Calm down! Everything will be just fine. You will not be paying 5%!
It is how Bismarck and I said it was. However, to be one the safe side, call MBNA to double check it.
This is the normal MBNA wording. It says that your payment will be the "LEAST" of the following options:
1. 5% of statement balance
OR
2. £5 plus interest, payment protection, handling fees, default charges (but £10 minimum)

The least of those two for most people will be option 2. If you are on a 0% deal, don't take payment protection insurance, are up to date with payments and have not BT fees that month, then your payment will be £10.

Clariman

mizmir

Just reread it too and yep I panicked too soon! Am on a 6% lob rate so min payment will stay as it is now. Will be able to knock out the high interest ones after all. Thanks.

Sheepy1209

To update my previous comment; the minimum payment is indeed the lesser of the two, and as you're paying a life-of-balance 6% you should be OK - but of course only £5 a month goes to repaying the loan.

For anyone NOT on a fixed rate, do NOT rely on MBNA's low minimum repayment. It's a trap which is extremely hard to get out of, and MBNA are now choosing to punish people who make minimum repayments by pushing the interest rate up - which benefits nobody but them, and if it pushes someone into insolvency it benefits nobody at all.

Because the minimum repayment means virtually all the payment is interest, if they double the interest rate (and they do - look at some of the threads on here) your repayment doubles. Not nice.

Steer clear of MBNA unless:
You pay the balance in full each month or
You're on a low/zero interest rate and can be sure of repaying it at the end of the deal or
You're on a life-of-balance deal (but life-of-balance = life-of-you if you only make the minimum repayment!)


Believe me, I've been there. :mad:

mizmir

Sound advice sheepy. I am very wary of MBNA in spite of the lob rate. Once the higher interest cards are cleared (or transferee if BC give me a lob card) then MBNA will be first on my hit list.

Lula-Hula

Guess I'll be binning that MBNA offer then !

Relieved on everyone's behalf

Lula