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 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.