Interest Rate Hikes for MBNA Customers
There has been a flurry of complaints surrounding the sharp and unexpected increases in rates of interest payable by users of MBNA credit cards. To make this look slightly more devious, this is tending to take effect around the time that customers come to the end of their introductory low or zero rated interest periods. So customers expecting to revert to the standard rate of 15% after a 6 month introductory rate of 0%, might find themselves facing a rate as high as 29%. What is also confusing matters is that customers are only presented with the monthly rate of interest on their statements rather than the annual percentage rate. So while the former may look reasonable at 2.52%, the reality comes out at an APR of nearly 35%.
Around 7 million of us own and use credit cards which have been issued by MBNA. They are usually branded with a popular high street bank, retailer or corporation such as Virgin or Sony. However it does not appear to be only MBNA guilty of significant increases, and Moneysupermarket.com report that 31% of respondents to a recent poll indicated that their APR had been hiked in the previous 12 months.
Credit providers have the right to make changes to your account at any time. Provided you are not on a low or zero interest introductory fixed rate, they can increase your interest rate, reduce your credit limit, demand immediate repayment and withdraw any associated benefits of services. Moreover, they can do this with less than one month’s notice. This may seem very unfair, especially when we are talking about APRs of around 34%. But what makes it worse is these hikes can put immediately put people over their credit limit, which will also incur further charges. However, the OFT have stated that any fee must accurately reflect costs incurred on the credit provider’s behalf – so if you feel it is unjust, get on the phone as quickly as possible and politely request the fee be scrapped.
So why do credit providers up the APR in this way? It’s often due to their concerns over your credit-worthiness – you may not have been paying very much off the debt, or you may have been late paying. So to avoid the credit provider pulling the rug out from under your feet like this, ensure you are paying back more than the minimum amount each month and doing so on time. If it’s too late and the rug has been well and truly pulled, the only options are to pay the debt in full, or more realistically, do a balance transfer to an alternative 0% interest rate card provider. But do bear in mind that this is not free, and there will be a fee of 2-3% of the debt moved across. In any case, always ensure you check all your credit card documentation to find that all important APR so you can see what the repayments would be for the life of the debt, rather than what they would be for that month alone.
More:
- Credit and Debit Cards
- Consumer Credit Act
- Accessing your Credit File
- Debt Management and Debt Collection Agencies
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I have received a letter today telling me my interest rate is going up to 29.9 percent by MBNA (Virgin)!!!!!
I am absolutely flabbergasted and disgusted –at a time when they know full well people are struggling and perhaps are leaving balances on their cards more than ever they are taking full advantage. They should be accountable surely?
Given they appear to be the most aggressive in chasing debt (my brother has the misfortune of being pursued by them a few years back)and are constantly sending me cheques to try and con me out of more money this is disgraceful behaviour.
I am fighting them. I have been with them for 8 years making regular mimimum payments plus ad hoc additional payments off the balance. I cannot move my balance now it’s too large and banks are very reluctant in the credit crunch. MBNA know this. I cannot pay off 17,000 in one go. The recent hike from 15.9 to 29.9% on this level of balance cause an otherwise affordable payment to become unaffordable, costing 200 pounds per month more and pure profit for MBNA.
This hike was quickly followed by a call centre offering a secured loan, loans uk – which I believe is an MBNA company, with their opening line “now that credit card interest seems to be rising have you considered…..” – Spot the scam ???
I have refused to pay anything further while it will be taken as interest and I am making formal complaints to OFT.
This company needs to be prosecuted. As this post above also points out MBNA do not publish the APR on the statement and they don’t always tell you your interest has gone up. Check it for yourself you are probably paying more than you think. Its the tiny numbers in the back page!!. If you are looking for a card, DONT get MBNA or any of its affiliates such as Abbey / Virgin etc. or you will surely be scammed by them at a later date.
Same thing happened to me nearly 35% from virgin so many others i guess,shocking !! i wonder where is, FSA, OFT, UNFAIR CONTRACT TERMS ACT 1977 and all others
sitting over 100Ks tax payer salary to protect consumers!!!!!
MBNA have just doubled my APR without warning to thirty odd percent – I am horrified – it sent me over my lending limit and they are charging me a fine for that – how can that be fair with no warning???? Disgusting!!!!
i was offered a 0% deal by mbna in oct, until jan 09, by text message, i transferred a 10,000 pound debt, when i received my statement, they charged £300 for cheque and £ 250 interest, which equates to 29% annual interest, they still deny sending me the message, ( but its still in my phone)- i have since paid off the total balance , so the tranfer has cost me £550.00 for 3 weeks , they refused to refund over the phone, have sent a letter and will pursue my money through all legal avenues, these are a bunch of robbers, liars, and god help other people who are not able to pay off larger balances ,as these people will bankrupt you with charges, dont forget the £ 250.00 was pure interest, you would never be able to repay the debt in full!- PLEASE DO NOT ENTER INTO ANY AGREEMENT WITH MBNA , AS IF THEY DONT CATCH YOU THIS TIME, THEY WILL THE NEXT,-
MBNA did this to me after being with them for years (never missed a payment) they hiked up the interest to 30% & left me with no available credit late fee and overlimit fee. Was paying £130 now they want £247.
They know what it is to want and I am point black refusing any more payments and we should all refuse to pay them for their tricks. They will fall like a pack of cards. Please note there’s more of us than them they will crash if we all refuse to make unreasonable payments.
I ahve had a similar experience.
In my case when I first complained, they ignored me.
Then they told me over the phone that they were not raising it.
Then I received a statement with the increase.
I too am refusing to pay.
MBNA – what a con! They still advertise all these offers then just before they expire they increase your APR to 34.9% and insist this is a fair rate, what a joke.
If you want a new credit card deal I WOULD NOT RECOMMEND ANY OF MBNA’S PRODUCTS for example Virgin, BT, National Trust, WWF, Liverpool football club, etc. etc. you’ll get STUNG!!!
MBNA are without doubt the worst credit card company I have come accross, they have ZERO customer loyalty and increase interest any time they like.To outrageous levels 30% plus. Charge fees like it was christmas and can get you so messed up you could have a nervous breakdown. You can get so tangled up in there evil web of lies and rip off fees you can see no end to the mess.
Try these great people the CCCS Consumer Credit Counselling Service.TEL They are a totally free charity and totally confidential. They can sort out a debt management plan to rid you of your debts in 6 years, and lets face it most of us in debt cant even chip at the capital as the interest is mostly what you pay.
Recognise your situation and arrange a plan, once you do this you will get peace of mind as you make only one payment to the cccs each month and no more letters and statements each month.
The credit card companies will GO beserk at first and can be very intimidating, endless phone calls (even first thing on a Sunday mornin) and letters from collection companies. The collection compannies really have no MORE power than the original credit card company. Be prepared for loads of hassle but relax as its just a show.
Show the credit card companies you mean business, you will pay them something each month but put a stop to ther rip off interest and fees. They are scamming us all to a maximum, leaving many of us with nothing to live on each month, remember you go to WORK for your money, they sit on there fat arses collecting compound interest.
You will need to send each credit card company a letter (template provided by the cccs) and a token payment and cut your card in half and send it back to them.
In theory the credit card company could refuse the offer of payment from a debt money plan and if they do you may get a ccj but even if you do its just a show, you dont need to go to court anyway, just fill in the form with the original offer of payment and the ccj will usually come to the same conclusion of payment therefore the credit card company has wasted its time.
Bailiffs can only call if you fail to keep up payments on the ccj so thats good to know.
Finally, do not borrow more money to get out of debt and dont borrow on a secure loan on your house (MBNA QUICKLY LATCH ON WHEN YOUR IN A MESS TO TRY ANY GET YOU TO TAKE OUT AN EXSPENSINE SECURED LOAN, ultimately to get your home) of all the things you should pay 1st its your mortgage, as its you home, even if they did clean your house out and you were left sitting in an empty house on a box, at least you would have a roof over your head.
I really hope I may have helped at least someone and feel free to copy and paste this formum to any other forum.
And if you are a parent like me keep ramming the message into your children NEVER EVER EVER TAKE out a credit card.
Especially with crooked outfits like M.B.N.A.
Good luck all
Lets fight back!
I thought I was of the minority that had been hit by MBNA. I took a 0% balance transfer deal in October 2007 and the very day that offer ended this year ( 2008 ) I got a letter saying my rate would increase to 24.95%. I work for a bank so called MBNA to question there reasoning behind this, and they simply could not give one. This is a clear scam and as many of you say, this is coming at a time when it is hard enough to pay debts down. MBNA is a terrible credit card company who are nothing but vultures. If I did not have children I would merely not pay the card and let them swing for the debt. How nice it would be to give them a taste of there own medicine.
MBNA increased my APR from around 15% to 34.9% on a £10,000 balance despite being a customer for 4 years and having never missed a payment! After complaing on the phone they reduced it to 24.9%. On phoning a second time and being very persistent, the customer service person admitted that the computer said I was eligible for a 17.9% APR – so why did they increase it to 34.9%!
Unfortunatly I did not notice that they had increased my APR for quite some time as they did not write to me but instead hid the increase in very small print on the statement as a monthly interest APR (it’s tought me to read my statements).
Any one know what will be involved with claiming back interest after this new deal with the givernement has been struck?
http://news.bbc.co.uk/1/hi/business/7778218.stm
Hi,
We have just received our statement with a £90 interest charge. This was incured as we were 1 day late paying off our balance of £1600, and the interest charge, we were told when we phoned, was backdated to the previous statement date, and then added on a daily basis on the outstanding amount, increasing with all new transactions from the date of that transaction.
We have been told that even once we pay off the full amount of the statement, we will get an interest only balance next month, (incured from the statement date to when the payment hits the account) then, once that is paid off we will be clear. It is not a good account and we will not be using it again.
We have looked on the MBNA website at the terms and conditions and cannot find where it states that the interest will be charged in that way. Or if it does say that it is very cryptic!
Can anybody suggest how we can resolve this problem as the interest is unacceptable in the way it operates? Once we pay it all off, is there any way we can claim it back as being unfair?
send letter by recorded delivery, stating, that the interst rate they have charged you for late payment in no way represents the true cost to the company (MBNA)late payment charges are set by OFT at £12.
While this account is in dispute you cannot levy further charges. I will await your final response. When i receive this i will lodge a formal complaint with FOS and OFT.
Further ask them to send you a CCA (credit card agreement) this must be returned to you by latest 12 days. Failure is a criminal offence under the Consumer Credit Act 1974. And as such you can take them to the small claims court. Charge them for your time e.g £20 per hour, writing letters, phone calls, reading legal matters etc which in any event is cheaper than a solictor at £220per hour.
Without warning, MBNA just reduced our limit putting us in an “over Limit” situation and demanding immediate payment!
In Dec we applied for passports which required a credit card for payment. We had a balance of $3000 which more than covered the $600 for passports. They are now refusing to honour that payment so I guess our passports will be rejected!
I hope their executives sleep well at night!
I have also joined consumeractiongroup.co.uk – they have hundreds of complaints re: credit cards including MBNA. Without doubt MBNA being the worst. I wrote letter of complaint Sep 07 to FOS and OFT. OFT do not handle individual complaints, but make offical note of company. FOS just keep sending letters we are v.busy etc
MBNA continue to bully and harrass – they are without doubt the most disgusting company i have ever dealt with! hiked up my interest rate to 34/5% without notice.
CCCS are brilliant, they admit the worst company is MBNA, all credit cards will accept token payment with our letter, but, you may have a problem with MBNA.
Anyone interested in going to 10 downing street with me to lodge complaint????? please reply
Hi Sandy I will definitely be interested in lodging a complaint.
Count me in- I have had endless problems with them
I have been battling with MBNA(Virgin) for 18 months now. It was my own fault really and I can kick myself because I went over the limit without realising and continued to pay the same amount each month little did I realise I was gathering more and more interest over the two months that I didnt check the account. I then got a letter saying I was being penalised and being put on 34% interest I didnt kick up a fuss instead paid the extra each month thinking my rate would be returned to 17% each month the amount I had to pay went up I kept paying more. Now 18 months later after paying in about 2K maybe more I still have not even made a dent in my balance the last two months has seen my account go under the limit by a couple of hundred pounds but still my interest rate has stayed at 34% I have queried why its hasnt been returned to 17% and every answer means another brick wall.
I made a late payment this month so I have just checked what I need to pay next month its £60 more plus a £12 charge. I cant survive like this I think they are breaching my consumer rights or something if not it just doesnt seem ethical that these people will offer you no guidance or a help.
I wrote them a letter asking to stop the interest on the account until I could get back into the limit yet they never replied, I have spoken to many customer service people who fob me off with long hold calls and transfers to every dept in the company to be told nothing can be done about it except a few times being offered loan at %15 which is secured against my home.
I dont know what to do or who to ask for help regarding this all I know is that I cannot keep paying the high amounts each month I was paying £150 18 months ago in the last 2 payments I have paid a sum of £800 and I havent used my card since it was block from use 18 months ago and the balance is only £200 less than it was 18 months ago.
Something needs to be done about these fat cats!
I paid off all my Credit Cards in one foul swoop in March 2007, but decided to keep the one which offered me the best deal. No suprises it was virgin MBNA that offered me 11% apr for 1 year. That seemed very good at the time and although my gut feeling said “no dont stick with these guys” I kept the card, and slowly spent away on it as they slowly increased the credit limit throughout the term of one year. Since the initial year they have hiked my rates up 3 times, lastly being in September 2008 to 34.9% apr. I wrote a letter of complaint and finally received a final responce this morning which includes the line “Regrettably, we are unable to reduce the interest rates on your account. Currently this is the most competitive rate we are able to offer.”. Oh how I laughed! It’s no wonder Mr Virgin has his own island, as part of it must surely be mine.
I will obviously try to pay it all off and close the account, but of course they have you by the short and curlies. They must credit check you periodically in order to increase your limit, so they know when your NOT gonna get any more credit – then bang the rates up.
DONT GET A VIRGIN CARD PEOPLE!
MBNA has hiked my interest to 34.5% after a balance transfer! I only noticed it 6 month later as I have been doing a direct bank payment. I wrote to them and they replied saying that under my current circumstances which they are able to discuss, they feel that’s the right interest rate, if I want to know what has affected my rate, then I need to contact Experian! As it happens I am an experian subscriber and my rating is in the 10% of the highest nationally, and a squeaky clean record of payment for the last 10 yr., I have decided that I don’t trust them and paid off £8k from my bank account and as soon I have the rest I will settle it and close my account! People should remember these kind of abuse by banks like MBNA and should avoid them and discourage friends and family, so far I have encouraged 3 of my colleagues to give up their card, in face of greed just like many other bank, I hope MBNA goes bust just like them!
totally agree with the above. i was late by 5 minutes with an online payment and they took my promotional rate of me. rang them and they said there was nothing they could do. i now have to pay £237 a month interest alone on a 9,000 bill dont know what i am going to do! can anyone give me any tips?
I originally had my credit card through Alliance & Leicester which seems to have recently been transferred to MBNA. Yes I did run up my credit card originally but this was because I became unemployed and basically used it to live off as what the Government pay in JS allowance was just not enough. Anyway I successfully gained employment, getting on for 2 years now, and the first thing I sorted out was to get my debts cleared as I hate being in debt. All is going well with my other creditors and most of my debt is clearing nicely, except of course this one, as the interest they are charging is an absolute disgrace.
At present I am paying £65 per month, far more than what’s required (because I want this debt gone!) but MBNA is taking nearly £40 of that per month in interest, so my huge attempt to get this cleared is going nowhere as I am taking 1 step forward and half a dozen back. To put it into context my last statement said ‘balance from previous statement, 1378.04, new balance 1363.49′. You can see from the figures that my £65 is going nowhere. And does this company begin to care about this, NO! Does this company take into account that you are paying over the top of what they ask for each month, NO! Is this company just one big parasitic roach that wants to bleed their customers (of which I wasn’t one to begin with) dry just so they can have their interest and keep their board members pampered and spoilt, YES!
One day this debt will clear, hopefully whilst I still have breath in my body, and roll on that day cos I sure as hell going to tell them exactly what I think of them when the debt is gone, mark my words!!
Hi Trish,
Have you though about doing a balance transfer to a 0% interest card – there are a few out there
Tony
these people are far worse than loan sharks my rate is now withem at a whopping 34%
We have had a trouble free Alliance & Leicester credit card for about 15 years, invariably paying off in full each month.
Our last 4 statements, (beginning Nov 09, and I suspect co-inciding with the MBNA takeover), have all arrived too late to allow (immediate) payment within the deadline. The Dec statement arrived on a Fri pm with the following Sun as the deadline! Although we live in NW Scotland, none of our other mail suffered notable delays despite the seasonal rush and bad weather.
MBNA have brushed off complaints with a standard response to each and have refused to lift the penalty payments and interest charges, hiding behind the terms of ‘my agreement’ (which was not offered for renewal and signed by me!)
They fail to address comments that the problem appears to co-incide with their takeover of the card.
This is shabby and unethical, the credit card company should have a legal obligation to ensure that statements arrive with adequate time for payment. Next step the ombudsman and a new card provider