VIRGIN % Hike to 34.9% but thats not the best bit!

Sherbet101

Hi all

I spotted a big change in my monthly interest rate for my Virgin Card and so decided to call them to discuss.

They advised me that the rate has gone from 24.9% to 34.9% in March 2008. !!

Now this is the interesting bit..

My Balance is £8,850.02
Credit Limit £9,000
Interest this month £250.73
Min Payment: £210.62

Now what that in turn means is that at that rate, in 2.8 months, if I spend nothing on the card (which I haven't done in 3 years), the fact that the monthly interest rate is over the required minimum, will put me at , and then subsequently over my limit and liable for charges!!

Now the background is.. I opened the account in 2005, transferred a balance and left it.. I've never missed a payment, never spent on the card, but because of my circumstances (change of job) am not in a position to take out a new card to transfer the balance across.

Despite that.. they explained that the account is a variable rate and as such can go up ..and down (like that'll ever happen).

I pointed out to the operator that it seems unscrupulous, to increase a rate, without increasing the min payment, to a point whereby, by me doing nothing, spending nothing and continuing to meet their payments, I will potentially be in a state where things go pear shaped... As expected he seemed non phased...but he's only the guy on the phone, so can't blame him..

Has anyone else experienced this??

Is this a banking ombudsmen issue...??

Martin..if you do read this...are you aware that this is going on??

Thanks

Mark

Milarky

But with MBNA (Virgin) the minimum payment should always be set at £5 + last month's interest should it not? So your interest this month should never be more than the next minimum payment (even if it is more than the last)?

More seriously, at the old rate - never mind the new one - this is crippling you. You really need do anything to move that debt (even a personal loan loan would look attractive at 12%?)

YorkshireBoy

Sherbet101 wrote: »

My Balance is £8,850.02
Credit Limit £9,000
Interest this month £250.73
Min Payment: £210.62

I'm not sure what's wrong here, but your interest should be £8,850.02 x 2.5261% = £223.56, and your minimum payment should be the lesser of 3% of the balance (£265.50) or interest + fees + PPI + £5 (£223.56 + £5 = £228.56). Perhaps you've made cash withdrawals and the rate for those is even higher still?

Now the background is.. I opened the account in 2005, transferred a balance and left it.. I've never missed a payment, never spent on the card...

If your minimum payment clears the interest each month (see above), how can the balance increase?

Despite that.. they explained that the account is a variable rate and as such can go up ..and down (like that'll ever happen).

It does though...my Virgin rate is 10.9% APR (not that I'll ever use it because there's a 0.9% BT on there).

Has anyone else experienced this??

There have been many threads on the Virgin (or rather MBNA) 'pricing for risk' policy recently.

Is this a banking ombudsmen issue...??

In my opinion, no (I know that's not what you want to hear!).

Paul_Herring

Sherbet101 wrote: »

My Balance is £8,850.02
Credit Limit £9,000
Interest this month £250.73
Min Payment: £210.62

Where are those numbers from? Current data from Online? Statement?

What were the numbers last month?

PROLIANT

I hold sub prime cards at the moment, Capital One Visa @ 30% APR and Monument Visa @ 26.6% APR, might want to do a balance transfer to one of these if MBNA are charging 34%, MBNA, EGG etc will not give me an account by the way.

jamalfatty

Similar thread here

http://forums.moneysavingexpert.com/showthread.html?t=758771