New Day: Bye Bye Minimum Payment?
Comments
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chattychappy wrote: »I can see the posts now:
I signed up for DD as recommended on this forum and by Martin. I started to get these messages about paying more than the minimum. No problem, I thought. I've done everything right: I signed a DD. But after a few years I checked a statement and found I still owe £xxx. (I don't normally bother with statements, I'm too busy.) So imagine my horror when I called them up to find that the reason for this is that they didn't take the extra. The woman on the phone was very rude to me. She kept shouting and swearing at me and I felt humiliated. She tried to tell me that I must pay this money. Why should I pay £xxx to greedy bankers when it was their fault I'm in this mess? My question is: Obviously I'm not paying the balance back. But how much compensation am I entitled to? :j:j:j:jBlackbeard_of_Perranporth wrote: »I have highlighted the errors of your ways!
Doesn't anyone on here have a sense of humour anymore (or the ability to read the first line of a post)?! Unfortunately it says quite a lot about the sense of entitlement shown by many posters that a clear parody seemingly isn't recognisable as such by some....Deleted User wrote: »You're entitled to zero compensation0 -
Thanks, at least a few got the humour!
It was an attempt at making the point that the very people that these measures are designed to help may be confused by them - and then look to blame lenders for not doing more. It is difficult to implement a policy such as this without adding complexity.
I would suggest a better approach would be a "variable minimum payment". The range would be stated up front: eg 1% to 5%. Where the "responsible" lender is concerned somebody is only paying minimums, then the minimums would be jacked up. This way people on DDs will automatically pay more. That said, it probably throws up as many difficulties as it solves.0 -
Could be potential problems arising out of this, for people who don't actively monitor their statements or are already struggling financially if they have more money taken from their banks than expected.
This is from the Terms and Conditions:
"if you pay by Direct Debit we will automatically collect both your
recommended extra payment and your contractual minimum payment each month."0 -
enthusiasticsaver wrote: »Paying minimums only for significant periods of time is a bad thing and in general credit cards should dissuade people from this but of course this will hurt their profits.
The problem I have with this is that if we "dissuade people from" paying the minimum then that minimum no longer exists. It would be simpler to increase the minimum payment, say from 1% to 2% instead of burying the increased minimum payment in the Ts & Cs surrounded by jargon which some customers might not understand.
As an example and analogy, if the minimum payment is £25 and the lender adds an extra payment of £25 to pay down the balance in accordance with the Ts & Cs then the minimum payment is £50.0 -
Good in principle, but ultimately it's not to help the customers... it's to help the LENDERS.
Reading their accounts (and Provident's) it's clear persistent debt will hit profit.
Essentially what they're doing is upping the minimum before the card can hit the persistent debt threshold. Thus getting normal repayment, at full interest rates, from everyone that isn't overly struggling. If calculated properly, the account should then never hit the persistent debt threshold.
Those that are genuinely struggling and can't afford the extra will have their account blocked (up to 18 months earlier than the persistent debt definition would come in!) so they can't spend more.
Will interest for the latter be frozen? Even if it is, if the customer is then not spending on the card (enforced) they won't hit the persistent debt threshold and thus NewDay won't have to write off interest already included within the balance
* Unless of course that action forces customers into Bankruptcy/IVA etc, but that's presumably going to be few and far between.....
The more companies that play this game (I vote for Vanquis next.....), the more customers will actually be under pressure in the short term and therefore be forced to take drastic action such as letting the account(s) default or ultimately bankruptcy/DRO/IVA0 -
Congrats Aqua card aka NewDay
Since got a statement reminder e-mail today for 1 of 2 aqua cards.
Wasn't planning on increasing payments yet until 2019 until...
According to Aqua payment tool -I've just save 10 years and 1.8k interest isince I increased DD from 27 to 35 per month -amazing 2041 clear date has changed to Aug 2021!
I've also increased second card as well-not as much balance or payment though upping to 30 per month saves a few years and considerable interest which could have been 1275 approx.
I've never been as tempted to destroy some credit cards as I know if I'm tempted to use them then I'll be stuck paying them for almost unlimited years.
Excellent 'tool' going to see a lot more of these across a few providers over next few years.
All it takes is for card users to spot the tool option and run different payment scenarios.Replenished CRA Reports.2015 Zoe i nav -67-131 miles top charge. Savings depleted. VM Stream tv M250 Volted to M350 then M500 since returned to 1gb0 -
Somerset_La_La_La wrote: »Good in principle, but ultimately it's not to help the customers... it's to help the LENDERS.
Reading their accounts (and Provident's) it's clear persistent debt will hit profit.
Essentially what they're doing is upping the minimum before the card can hit the persistent debt threshold. Thus getting normal repayment, at full interest rates, from everyone that isn't overly struggling. If calculated properly, the account should then never hit the persistent debt threshold.
Those that are genuinely struggling and can't afford the extra will have their account blocked (up to 18 months earlier than the persistent debt definition would come in!) so they can't spend more.
Will interest for the latter be frozen? Even if it is, if the customer is then not spending on the card (enforced) they won't hit the persistent debt threshold and thus NewDay won't have to write off interest already included within the balance
* Unless of course that action forces customers into Bankruptcy/IVA etc, but that's presumably going to be few and far between.....
The more companies that play this game (I vote for Vanquis next.....), the more customers will actually be under pressure in the short term and therefore be forced to take drastic action such as letting the account(s) default or ultimately bankruptcy/DRO/IVA
The email communication today from Virgin Money regarding its credit cards T&Cs is more informative about persistent debt and it generally avoids what some customers may regard as a threat to discuss the account. But VM also includes a remedy of increasing the credit limit or suspending the card.
According to VM "persistent debt" is when over a period of 18 months more is paid in interest than is paid off the card balance. Then follows "Extended Persistent Debt" which is the same as "Persistent Debt" but over 36 months and carries the remedy of increasing the minimum payment or suspending the card.
According to VM the change is the result of an investigation and new rules of the FCA with which lenders have to comply by September 2018. There is a light at the end of the tunnel for those in Persistent debt although how brightly it shines remains to be seen:
https://www.fca.org.uk/news/press-releases/new-credit-card-rules-introduced-fcaOnce a consumer has been in persistent debt for 36 months, their provider will have to offer them a way to repay their balance in a reasonable period. If they are unable to repay the firm must show the customer forbearance. This may include reducing, waiving or cancelling any interest, fees or charges.0 -
The email communication today from Virgin Money regarding its credit cards T&Cs is more informative about persistent debt and it generally avoids what some customers may regard as a threat to discuss the account. But VM also includes a remedy of increasing the credit limit or suspending the card.
According to VM "persistent debt" is when over a period of 18 months more is paid in interest than is paid off the card balance. Then follows "Extended Persistent Debt" which is the same as "Persistent Debt" but over 36 months and carries the remedy of increasing the minimum payment or suspending the card.
According to VM the change is the result of an investigation and new rules of the FCA with which lenders have to comply by September 2018. There is a light at the end of the tunnel for those in Persistent debt although how brightly it shines remains to be seen:
https://www.fca.org.uk/news/press-releases/new-credit-card-rules-introduced-fca
Over 36 months-potential forced large payments at least much more than minimum payment.
This could happen I think considering uk's trillion debt owed from consumers-myself included.Replenished CRA Reports.2015 Zoe i nav -67-131 miles top charge. Savings depleted. VM Stream tv M250 Volted to M350 then M500 since returned to 1gb0
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