MBNA has announced that it is changing its policy on interest rate hikes effective from new year 2009. This is the excerpt from the announcement:
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Over the past couple of weeks, MBNA has been working with the Government and our industry groups on two initiatives:
To provide further help for customers who are in financial difficulty, and;
To put in place some principles - that all credit card companies agree to - about how we make changes to the standard interest rates on customers’ accounts, known as “risk-based re-pricing”
The Government and the credit card industry have jointly announced the outcome of our discussions. MBNA fully supports this outcome which we believe benefits our customers and our industry.
Further help for customers in financial difficulty
Where a “not-for-profit” debt advice agency e.g. Citizen’s Advice Bureau, The Consumer Credit Counselling Service (CCCS) has formally notified us that a customer is in serious discussion with that agency on a draft debt repayment plan, we will suspend collections activity whilst these discussions continue, as long as they are concluded within 30 days. Also, if progress has been made, we can extend this for a further 30 days.
Above all, we’d always say that if you are experiencing difficulties then the best thing to do is to talk to us because, if you don’t, then we can’t help.
Principles on risk-based re-pricing
The industry has developed these principles to cover the circumstances, alternative options, frequency and transparency of an interest rate increase. MBNA will apply them from 1 January 2009.
Where we increase a customer’s interest rate, we will provide him/her with options. These will always include the option to close the account and repay the remaining balance at the existing rate of interest, within a reasonable period, having regard to the existing level of minimum payments and the customer’s financial situation. Where we offer alternative lending products, we may also provide the option to transfer the balance to such a product at the existing (or lower) interest rate.
We will not increase interest rates in the following circumstances: • Where a customer has failed to make the minimum contractual payment requested on the last two or more consecutive monthly statements; or
• Where an agreed repayment plan is in place in respect of the account; or
• Where we have been formally notified by a not-for-profit debt advice agency that the customer is in serious discussion with it.
Provided a customer manages his/her account in accordance with the product’s terms and conditions we will not: • Increase interest rates within the first twelve months of a customer having a credit/store card;
• Increase interest rates more often than six monthly beyond this period.
We will always give a customer at least 30 days notice of an increase in interest rates, so that the customer can make other arrangements, should they so wish.
If the customer asks, we will ensure that our staff are able to provide the customer with an explanation as to why an interest rate may have been increased.
THESE PRINCIPLES WILL COME INTO EFFECT ON 1 JANUARY 2009 AND WILL APPLY TO ANY INTEREST CHANGE NOTIFICATIONS AFTER THIS DATE
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There is no indication as to what the policy reflects on the existing hiked cards. I will try to post more details on this as soon as I gather.
Monday, 29 December 2008
Wednesday, 17 December 2008
Sign The Petition To PM - Join The Campaign
The Petition submitted to the PM requesting to penalize the credit cards has been approved.
Please take few moments to sign the petition titled "Penalize The Credit Card Companies That Rip-off Customers By Unfair, Unethical and Unjustifiable Practices" submitted to PM.
Here's the link:
http://petitions.number10.gov.uk/unfaircards/
The details of the petition are here:
The credit card companies are following unfair, unethical and unjustifiable practices due to lack of government regulations and standards. The practices include increasing the interest rates to 35% or above, negative payment hierarchy and others.
When the livelihood is hard during the troublesome days, the irresponsible acts of Credit Card Companies are making people’s lives even harder.
However, the company behind the above cards MBNA had started hiking the interest rates without any business justification. Many customers rates have been hiked up to 35%.
There is absolutely no justification to these higher interest rates under any circumstances. When we tried contacting the company asking for justification, they wouldn’t reveal.
While the base rate of Bank of England is climbing down, the interest rates on the cards are hiking up exponentially.
To one's shock and horror, the interest rates MBNA charging the honest customers is well above 34%! The company has refused to do reduce the interest rates when customers pleaded their call centres. They have told us that they can do what ever they wish to do as the customer is bound by a variable interest rate contract.
Thanks to you all - please support the campaign.
Please take few moments to sign the petition titled "Penalize The Credit Card Companies That Rip-off Customers By Unfair, Unethical and Unjustifiable Practices" submitted to PM.
Here's the link:
http://petitions.number10.gov.uk/unfaircards/
The details of the petition are here:
The credit card companies are following unfair, unethical and unjustifiable practices due to lack of government regulations and standards. The practices include increasing the interest rates to 35% or above, negative payment hierarchy and others.
When the livelihood is hard during the troublesome days, the irresponsible acts of Credit Card Companies are making people’s lives even harder.
However, the company behind the above cards MBNA had started hiking the interest rates without any business justification. Many customers rates have been hiked up to 35%.
There is absolutely no justification to these higher interest rates under any circumstances. When we tried contacting the company asking for justification, they wouldn’t reveal.
While the base rate of Bank of England is climbing down, the interest rates on the cards are hiking up exponentially.
To one's shock and horror, the interest rates MBNA charging the honest customers is well above 34%! The company has refused to do reduce the interest rates when customers pleaded their call centres. They have told us that they can do what ever they wish to do as the customer is bound by a variable interest rate contract.
Thanks to you all - please support the campaign.
Monday, 15 December 2008
Virgin and A&L debts are cleared!
Big Thanks to my wife - she got the guts and savings to clear these two debts! She managed to pull all the resources to clear off more than half of the debt with MBNA.
I can now concentrate on Abbey alone - last time they said that they would consider decreasing the APR on the card if I reduce my debt by half. I have cleared more than half. I am eager to talk to the accounts review team at MBNA to see if they stand my their word!
I can now concentrate on Abbey alone - last time they said that they would consider decreasing the APR on the card if I reduce my debt by half. I have cleared more than half. I am eager to talk to the accounts review team at MBNA to see if they stand my their word!
Thursday, 11 December 2008
A Tiny Amount Of Relief
A sigh of relief !
I spoke to the MBNA Account Review department (after talking to Loyalty and others) to consider my request of reducing the interest rates.
As I told them that I am struggling to meet my payment schedule due to the hiked rates, they have reverted back the rates to my earlier rate six months back.
So Abbey now on 21.9 while others on 24.9 (something is better than nothing).
It seems if we let them know (only the account review dept can do this) that we are struggling to meet up payments due to the increased rates, they would go to the earlier rates (and the request should be within six months)
These are the number that might do the trip.
Account Review Dept: 0800 028 9170
Customer Loyalty: 0800 783 1116
The Cust Loyalty aren't much useful so I will suggest you to talk to Account Review Team.
I spoke to the MBNA Account Review department (after talking to Loyalty and others) to consider my request of reducing the interest rates.
As I told them that I am struggling to meet my payment schedule due to the hiked rates, they have reverted back the rates to my earlier rate six months back.
So Abbey now on 21.9 while others on 24.9 (something is better than nothing).
It seems if we let them know (only the account review dept can do this) that we are struggling to meet up payments due to the increased rates, they would go to the earlier rates (and the request should be within six months)
These are the number that might do the trip.
Account Review Dept: 0800 028 9170
Customer Loyalty: 0800 783 1116
The Cust Loyalty aren't much useful so I will suggest you to talk to Account Review Team.
Wednesday, 10 December 2008
US Senate Case Studies On Unfair Credit Card Hikes
While I was doing a bit of research on the unfair credit card hikes, I found an US Senate Bipartisan Investiation report into unfair credit card practices.
The report details eight cusomer cases of unfair credit card interest rate hikes. The report includes a history of payments for each of these eight customers. It explains that hiked rates are in effect allow the payments to coverup the interest payments while the pricipal balance does not deplete considerably.
Here's the Investigation Report:
I would appreciate if anyone one who's fallen into this trap like me can prepare their case to post here.
The report details eight cusomer cases of unfair credit card interest rate hikes. The report includes a history of payments for each of these eight customers. It explains that hiked rates are in effect allow the payments to coverup the interest payments while the pricipal balance does not deplete considerably.
Here's the Investigation Report:
I would appreciate if anyone one who's fallen into this trap like me can prepare their case to post here.
Tuesday, 9 December 2008
Draft Copy Of The Petition To Prime Minister
All, I have prepared a draft copy of the petition - see below.
I would appreciate if people add/delete/modify the copy so we can submit the petition to the PM. I must admit, I am a novice in this area, so any guidance will be highly appreciated.
Here's the copy:
Penalize The Credit Card Companies That Rip-off Customers By Unfair, Unethical and Unjustifiable Practices
The credit card companies are following unfair, unethical and unjustifiable practices due to lack of government regulations and standards. The practices include increasing the interest rates to 35% or above, negative payment hierarchy and others.
When the livelihood is hard during the troublesome days, the irresponsible acts of Credit Card Companies are making people’s lives even harder.
There are few companies in the United Kingdom that follow the mal-practices, once such notorious organization is MBNA Europe.
Many have opened up credit card accounts via A&L, Abbey and other Virgin websites, which are served from MBNA. Customers made avail the Balance Transfers on these cards at 0% introductory rates over the time.
However, the company behind the above cards MBNA had started hiking the interest rates without any business justification. Many customers ‘ rates have been hiked up to 35%.
There is absolutely no justification to these higher interest rates under any circumstances. When we tried contacting the company asking for justification, they wouldn’t reveal.
While the base rate of Bank of England is climbing down, the interest rates on the cards are hiking up exponentially.
To one's shock and horror, the interest rates MBNA charging the honest customers is well above 34%! The company has refused to do reduce the interest rates when customers pleaded their call centers. They have told us that they can do what ever they wish to do as the customer is bound by a variable interest rate contract.
It is true that the on the variable rate contract the company has the authority to increase the rates. But customers expect this to be in a limited bounds – not rocketing to sky.
To site one such case, please see the details of a customer who has three cards from A&L, Abbey and Virgin all served by MBNA. The following tables illustrates the details of the history of interest hikes from these companies in a matter of few months. They have increased, in some cases, three times a year.
Here are the details.
Abbey:
As of today: ---------- 29.9 (Balance Transfer and Purchases) & 34.9 (Cash Advances)
28 July 2008 ---------- 21.9 & 27.9
28 Jan 2008 ---------- 18.9 & 21.9
29 Jan 07 ---------- 9.9 and 9.9
Virgin:
As of today --------- 34.9 & 34.9
27 May 2008 --------- 27.9 & 27.9
26 Sept 2007 --------- 24.9 & 24.9
29 March 2007 ------- 15.9 and 20.9
A&L:
As of Today ----------- 34.9 & 34.9
29 May 2008 --------- 27.9 &27.9
30 July 2007 --------- 16.9 and 22.9
As one can see there is no pattern while hiking the rates. They have increased according to their wish and we can’t see ANY justification on doing so.
The second part is that no credit card company (with an exception of two companies off about 300 in the market) which allows the customer to pay off the expensive debt. They employ a Negative Payment Hierarchy practice that would not let the customer service his costlier debt. In a way the customers are trapped in the debt noose.
We sincerely appreciate if the government intervenes and brings justice to common public who are already struggling in the current economic situation.
I would appreciate if people add/delete/modify the copy so we can submit the petition to the PM. I must admit, I am a novice in this area, so any guidance will be highly appreciated.
Here's the copy:
Penalize The Credit Card Companies That Rip-off Customers By Unfair, Unethical and Unjustifiable Practices
The credit card companies are following unfair, unethical and unjustifiable practices due to lack of government regulations and standards. The practices include increasing the interest rates to 35% or above, negative payment hierarchy and others.
When the livelihood is hard during the troublesome days, the irresponsible acts of Credit Card Companies are making people’s lives even harder.
There are few companies in the United Kingdom that follow the mal-practices, once such notorious organization is MBNA Europe.
Many have opened up credit card accounts via A&L, Abbey and other Virgin websites, which are served from MBNA. Customers made avail the Balance Transfers on these cards at 0% introductory rates over the time.
However, the company behind the above cards MBNA had started hiking the interest rates without any business justification. Many customers ‘ rates have been hiked up to 35%.
There is absolutely no justification to these higher interest rates under any circumstances. When we tried contacting the company asking for justification, they wouldn’t reveal.
While the base rate of Bank of England is climbing down, the interest rates on the cards are hiking up exponentially.
To one's shock and horror, the interest rates MBNA charging the honest customers is well above 34%! The company has refused to do reduce the interest rates when customers pleaded their call centers. They have told us that they can do what ever they wish to do as the customer is bound by a variable interest rate contract.
It is true that the on the variable rate contract the company has the authority to increase the rates. But customers expect this to be in a limited bounds – not rocketing to sky.
To site one such case, please see the details of a customer who has three cards from A&L, Abbey and Virgin all served by MBNA. The following tables illustrates the details of the history of interest hikes from these companies in a matter of few months. They have increased, in some cases, three times a year.
Here are the details.
Abbey:
As of today: ---------- 29.9 (Balance Transfer and Purchases) & 34.9 (Cash Advances)
28 July 2008 ---------- 21.9 & 27.9
28 Jan 2008 ---------- 18.9 & 21.9
29 Jan 07 ---------- 9.9 and 9.9
Virgin:
As of today --------- 34.9 & 34.9
27 May 2008 --------- 27.9 & 27.9
26 Sept 2007 --------- 24.9 & 24.9
29 March 2007 ------- 15.9 and 20.9
A&L:
As of Today ----------- 34.9 & 34.9
29 May 2008 --------- 27.9 &27.9
30 July 2007 --------- 16.9 and 22.9
As one can see there is no pattern while hiking the rates. They have increased according to their wish and we can’t see ANY justification on doing so.
The second part is that no credit card company (with an exception of two companies off about 300 in the market) which allows the customer to pay off the expensive debt. They employ a Negative Payment Hierarchy practice that would not let the customer service his costlier debt. In a way the customers are trapped in the debt noose.
We sincerely appreciate if the government intervenes and brings justice to common public who are already struggling in the current economic situation.
Monday, 8 December 2008
Why can't I pay my expensive debt first?
Most of the credit cards will not allow you to pay the expensive debt. They make your financial difficult times even harder by employing a practice what they call Negative Payment Hierarchy.
What it means is that if you have card with two rates, say 10% and 20%, any payments that would go to your card will clear of (surprise surprise) 10% debt. One may expect that that the expensive debt should have been cleared instead of cheap debt. However, card companies wish to suck every drop of our blood!
How do we fall in to this trap?
The cards normally have introductory offers such as 0% balance transfers. So use the card for balance transfer, well and good. However, if you use the card for purchases (which may have different APR), or cash withdrawals you are fallen into the trap.
The purchased amount cannot be cleared until your balance transfer amount is cleared off. That is, the interest on the card accrues on the purchased amount (or cash amount) while your monthly payments are clearing off the 0% debt, s..l..o..w..l..y.
Many are unaware of this fact - so am I until few months back. I never read the small print - a dearly costing lesson.
Exception to this practice is followed by Nationwide and Saga - they follow Positive Payment Hierarchy.
What it means is that if you have card with two rates, say 10% and 20%, any payments that would go to your card will clear of (surprise surprise) 10% debt. One may expect that that the expensive debt should have been cleared instead of cheap debt. However, card companies wish to suck every drop of our blood!
How do we fall in to this trap?
The cards normally have introductory offers such as 0% balance transfers. So use the card for balance transfer, well and good. However, if you use the card for purchases (which may have different APR), or cash withdrawals you are fallen into the trap.
The purchased amount cannot be cleared until your balance transfer amount is cleared off. That is, the interest on the card accrues on the purchased amount (or cash amount) while your monthly payments are clearing off the 0% debt, s..l..o..w..l..y.
Many are unaware of this fact - so am I until few months back. I never read the small print - a dearly costing lesson.
Exception to this practice is followed by Nationwide and Saga - they follow Positive Payment Hierarchy.
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