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MBNA have increased my interest rate and won't tell me why

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  • 15-07-2009 1:20am
    #1
    journey
    Closed Accounts Posts: 111 ✭✭


    Got a letter from them saying my interest rate was going up to 18.something% which is around a 3% hike. If I wanted to accept the change and continue to use my credit card as normal then I didn't have to do anything. If I didn't want to accept the new interest rate I had to contact them and they would then freeze my account pretty much. I'd have to continue making monthly payments until the balance was cleared and then my account would be closed.

    I contacted MBNA to find out the reason for the interest rate hike as the letter just gave a long list of possible reasons (Changes in your circumstances or in our credit assessment of you. - Changes in the cost of administering your account, our systems and services. - Changes in external influences economic conditions such as interest rates. - Changes in the legal or regulatory obligations which affect us.) for the increase but nothing specific. I got a one liner email back saying "Unfortunately we cannot give you a specific reason why the rates were increased on this account. Regards, MBNA"

    I am absolutely flabbergasted. I can't believe that they won't give me the reason for increasing my interest rate. I have been a customer of theirs for about 7 years now I reckon. I was late with 2 payments a few months ago as my pay cheque was delayed (I am self employed). At the time a CS rep from MBNA phoned me and I made an immediate payment over the phone, and they removed the late charge as I was "a long standing customer with a good payment history".

    I am guessing that these late payments are the reason for this increase and if so, while I'm not happy about it, fair enough. But what has really got my goat is the fact that they won't tell me the reason for it.

    Surely they are obliged to give me a reason????


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    #2
    jor el
    Closed Accounts Posts: 16,713 ✭✭✭✭jor el


    It's called a variable rate for a reason; they can vary it at any time, for any reason. Credit cards, store cards, and HP lenders rates are never fixed, and they are not linked to the ECB, so they don't go down when rates drop.

    Littlewoods just increased their rate to to 40%, sign of the financial times.


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    #3
    Cabaal
    Moderators, Technology & Internet Moderators, Regional South East Moderators Posts: 28,490 Mod ✭✭✭✭Cabaal


    They don't have to give you a specific reason, they are changing their interest rate in-line with the T&C's you previously agreed to.

    If you don't like it change CC providers


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    #4
    Ste.phen
    Registered Users Posts: 2,808 ✭✭✭Ste.phen


    They're putting your rate up because they'll make more money from you that way. Maybe try another card and avail of a 0% balance transfer?


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    #5
    kmick
    Registered Users Posts: 3,375 ✭✭✭kmick


    MBNA are extremely predatory and have a number of dodgy practices. Saying that they can do what like with their rates. However you have all the power here. Just transfer your balance to AIB or PTSB. Simple as that.


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    #6
    dudara
    Registered Users Posts: 33,518 ✭✭✭✭dudara


    Moved to Banking & Insurance & Pensions

    dudara


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    #7
    100gSoma
    Registered Users Posts: 1,285 ✭✭✭100gSoma


    My rate was at the standard 15% for a long time. 5 years maybe, and I had a very good sized balance the whole time. Then one day I decided it was time to clear it once and for all. I decided to switch to a 0% card. I rang MBNA to tell them I was leaving. They asked why etc (I was obviously worth keeping with my permanent balance). I told them I wanted to clear my balance and the 0% interest for 6 months was the best way. They asked me had I ever rang up to discuss my problems paying etc. I said no. They gave me a number to call. The person at the other end immediately offered to drop my rate to 10.4%. I asked for how long? they said "indefinitely" (still 10.4% now). I decided to stay. I cleared my credit and have not used the mbna credit card in 10 months (Except to pay the 30euro Govt. charge). I use Halifax Visa debit for on-line payments and I avoid credit at all costs. It's a slippery(and expensive) slope. I think you should ring them and tell them you are leaving. be prepared to move to a 0% for 6 month credit card and transfer the balance. They should offer to adjust your rate back to what it was, or maybe even lower. It just depends on how much they have made out of you the past 7 years and if they want to keep you. I would be very confident in getting the rate reduced back to 15% easily enough.


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    #8
    BuffyBot
    Registered Users Posts: 24,924 ✭✭✭✭BuffyBot


    It's quite a common thing at the moment with MBNA (both here and in the UK).

    Basically, they've looked at you and figured a) you're not making them any money and/or b) you fall into a riskier grouping and they're upping the rate to compensate for that.

    As the account is a variable rate, what has been said above is correct, they don't have to do anything at all.

    Egg in the UK did something like that in 2007/8, though went a step further: 7% of their cardholders had no choice. Their cards were frozen and all they could was pay off the balance.


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    #9
    compsys
    Registered Users Posts: 1,080 ✭✭✭compsys


    AIB'S 'Click' card currently offers a rate of 8.5%, which I think is excellent as many overdraft rates and even home loan rates etc. would be close to this. The only 'tag' is that you have to be an AIB Internet Banking customer to avail of the offer as all transactions can only be viewed online and you never receive a paper bill. That's fine by me though as I prefer to do all my banking online. Anyway, maybe you should check AIB out...


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    #10
    journey
    Closed Accounts Posts: 111 ✭✭journey


    Thanks for all the replies.

    Will look into transferring. I think it may be a problem though. I got my MBNA card when I worked in a permanent pensionable well paid job all those years ago. Now I'm self employed and the balance on the credit card is fairly hefty as I relied on it a bit too heavily during a few lean months last year.

    Trust me, they're making plenty of money on me alright, so I guess it's the fact that I fall into a riskier grouping now and so they've upped the rate to compensate for that.

    Very annoying that they won't give me the reason why though.


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    #11
    Uncle Chenzo
    Registered Users Posts: 67 ✭✭Uncle Chenzo


    I got the exact same letter from them, i've had a few late payments etc, nothing major, i did have two cards - one personal, one business. Generally, both cards always kept under control.

    About two weeks ago, i cleared both - nothing too heavy. Kept the MBNA one (business card), and got them to double my limit, then i get this letter.

    The changes come in to effect in August (for me), i didn't even bother ringing them, i was well p1ssed off when i received it, believe me, i also got the list of excuses.

    If you think for one moment that they take into account the fact that you have been a long term customer - you would want to wake up. You are a number, and they will be making more numbers from you.

    I will be moving from MBNA come August - no doubt.

    Shop around - its what these business' want you to do.

    The lazy get stung. Wake up.


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    #12
    100gSoma
    Registered Users Posts: 1,285 ✭✭✭100gSoma


    im surprised at that treatment. did you ring them and try and argue the raise. Like I said, they put my rate back to 10.4% when I complained. been like that ever since. but if they refuse to change it, 100% LEAVE. there are loads of options and its the easiest process to switch card and transfer the balance.


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    #13
    CSC
    Closed Accounts Posts: 653 ✭✭✭CSC


    As a previous poster said it's a sign of the times. All lending institutions are losing money with customer's who are defaulting on payments as they are not able to pay their monthly bills so they have to generate that income from customers that are able to make their payments.


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    #14
    journey
    Closed Accounts Posts: 111 ✭✭journey


    100gSoma wrote: »
    im surprised at that treatment. did you ring them and try and argue the raise. Like I said, they put my rate back to 10.4% when I complained. been like that ever since. but if they refuse to change it, 100% LEAVE. there are loads of options and its the easiest process to switch card and transfer the balance.

    I'm going to phone them tomorrow and see what they can do. It seems bizarre in this day and age that they don't have to give you a specific reason for increasing your rate.


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    #15
    journey
    Closed Accounts Posts: 111 ✭✭journey


    CSC wrote: »
    As a previous poster said it's a sign of the times. All lending institutions are losing money with customer's who are defaulting on payments as they are not able to pay their monthly bills so they have to generate that income from customers that are able to make their payments.

    After this happened I applied for a copy of my ICB Credit rating and my figures are quite good (no missed payments etc) so it certainly seems to be a case of punishing those who they know will continue to pay to compensate for those who won't. I'll see what the story is with transferring my balance to another credit card company and if I qualify then that will be the last MBNA ever sees of me!


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