Can high Credit Card interest rates be classed as unlawful or 'penalty' charges?

[Redletter]

Hi I'm not sure if I've started this thread in the right place so apologies if not.

I have recently realised that my Virgin MBNA credit card interest rate has reached 34.9% APR.

 

I have had the card for a couple of years and I naively assumed the interest rate was the 16.9% rate as when I originally applied for the CC.

 

My balance is approx £2800 and although, according to my Experian 'Credit Expert' account, my credit rating is an 'excellent' 940/1000 points, I am recently being refused for credit due to the level of my total credit being around £17000 including my car loan. So therefore I am not in a position to transfer the balance to another card as I cannot seem to get another!

(I already have 4 which are within £200 of their limits).

 

Can anyone tell me if there is any way I can get this rate reduced I am thinking on the lines of approaching the matter from the angle that I am being unfairly charged a higher rate as some sort of penalty as other people get the same card for the rate of 16.9% so why should I be any different????

 

What should I do?

 

Please advise!

 

Thanks.

Edited April 8, 2009 by Redletter
No replies!

[Redletter]

bump

[Redletter]

bump!

[Bradley68]

hi I am in the same boat .have complained to mbna but could not get a positive response so just complained to fos who seem to have a lot of complaints about mbna interest rates so hopefully waiting for a positive outcome. We complained under the 'unfair relationship under the Enterprise Act 2002 part 8

[DontPushMe]

You're not alone! I believe there's a 10 minute debate in the House of Commons next Wednesday. Maybe if everybody wrote to their MPs and told them what consumers thought of the usurous rates being charged then they might just get their noses out of the trough for long enough to take notice, but don't hold your breath. It's utterly indefensible to charge 70 times the base rate for anything.

 

Fleeced By RBOS has a similar thread at

 

http://http://www.consumeractiongroup.co.uk/forum/mbna/160210-extortionate-interest-rate-after.html

 

DPM

[poppynurse]

I complained to the FOS about the same issue with MBNA and have just had a letter reducing the rate to 20.9%. I also wrote to MP, Watchdog, Treasury, Trading Standards etc...

[Viscount Stair]

I don't think it has been tested but there could be arguments under both Unfair Relationships and also under the Unfair Terms in Consumer Contracts Regulations. I will try to elaborate in the near future.

[Redletter]

Thanks to all.

Do you think it may be worthwhile then to complain to MBNA and state that if their response is not satisfactory I will also complain to these governing bodies?

 

Does anyone have a link to said 'Enterprise Act 2002 section 8' please?

[Redletter]

You're not alone! I believe there's a 10 minute debate in the House of Commons next Wednesday. Maybe if everybody wrote to their MPs and told them what consumers thought of the usurous rates being charged then they might just get their noses out of the trough for long enough to take notice, but don't hold your breath. It's utterly indefensible to charge 70 times the base rate for anything.

 

Fleeced By RBOS has a similar thread at

 

http://http://www.consumeractiongroup.co.uk/forum/mbna/160210-extortionate-interest-rate-after.html

 

DPM

 

Thanks but the link didn't work for me!

[Viscount Stair]

The Unfair Relationships provisions are to be found in sections 140A-140D of the Consumer Credit Act 1974 (which were inserted by the 2006 Act).

 

The Enterprise Act 2002 is relevant in a different way because it gives the OFT power to intervene in the public interest rather than in a specific case.

 

Here is a link to a page on the OFT website that explains it all:

 

The Office of Fair Trading: Unfair relationships

 

There is a link on that page to OFT Guidance that is worth a read too.

[Redletter]

Thank you VS

[Redletter]

Poppynurse-do you mind giving some indication of how you approached this-what you said in your complaint.It would be most helpful!

 

Thanks

[Redletter]

I complained to the FOS about the same issue with MBNA and have just had a letter reducing the rate to 20.9%. I also wrote to MP, Watchdog, Treasury, Trading Standards etc...

 

 

What did you say in your complaint and where did you direct it to if you dont mind me asking.

PM me if you prefer.

Thanks

[Redletter]

bump

[Redletter]

I have just been told by the so called customer retention team at Virgin MBNA that no-one there has access to specific guidelines for customer account reviews and that the marketing team look at each individuals circumstances to decide upon which interest rates are applied to an account. Apparently I had 1 late payment in Sept 07 which took me over my credit limit, but I quickly made a debit card payment of 3 times the minimum payment but they would not verify that the interest rate hikes were punitive, just basically skipped around the issue saying that even they couldn't get hold of such information and they work there!!!???

They will not confirm that there is any selection process and advised me to pay "a lot more than my minimum payment in order to get the best rates"!!!

 

The question I have is this:

According to them I cannot complain to the FOS unless I have first made a written complaint to their customer advocates officer and have not been satisfied with their response.

Is this so or can I just write to them anyway???

[yourbank]

If you write to the FOS they will simply send it back to the company to respond to. You need to put a written complaint into the firm and then if they do not respond in 8 weeks or provide a final response that you are still unhappy with, you can then ask the FOS to look at the complaint.

[Redletter]

Thanks

[Redletter]

Thinking of sending something like this?????

Dear MBNA,

I have recently realised that my Virgin MBNA credit card is being charged at the extortionate rate of 34.9% APR, although on application it was 0% balance transfer and typical APR 15.9%. This had been effectively disguised through only the monthly rates being shown on my statements.

I have regular access to my credit reference files and I have according to them an ‘excellent’ credit score of 940 points out of 1000.

I have no adverse credit history, defaults or County Court Judgements.

I was given a credit limit of £3000 on this card.

I have paid by direct debit regularly and never defaulted on a payment.

I am aware of other customers of yours who do not have such a high interest rate applied to their accounts and I therefore believe them to be selective, punitive and unfairly applied to those who can least afford it. It is my opinion that I have been ripped off with the promise of a credit card at a competitive rate and then snared and tied down to an interest rate which is far from ‘typical’. I am aware that the rate is variable, but I believed the reason for this was with regard to fluctuations in the base rate. How you can justify charging interest of almost seventy times the base rate I find totally bewildering!

You are supposed to be an established professional company yet you seem to operate with total disregard for the welfare of your customers. I would even go as far as to make the comparison with loan sharks!!!

I am informed that I was ONCE late with a payment in September 2007.

However, if you were to check your records, upon realising that an error had been made I immediately paid a sum far exceeding the minimum due payment.

I have contacted your call centre staff on a number of occasions to express my concerns and request a goodwill interest reduction but have been quite abruptly dismissed, even invited to transfer the balance elsewhere if I wasn’t happy! Quite an impressive customer retention policy!

I wonder if you were to advertise your credit cards as “Typical APR 34.9% once we have snared our customers”, you would have any customers!

I remind you that the consumer credit act 2006 introduced the assessment of unfair conditions and/or business practices to determine if an unfair relationship exists between creditor and debtor.

Part 8 of the Enterprise Act 2002 can then be enforced if an unfair relationship exists.

Some examples of improper business practices are:

Using false or misleading statements in order to induce consumers to enter into a contract

Hiding important details about credit deals in the small print

Requiring consumers to sign credit agreements that are not easily legible and are difficult to understand

Failing to comply with the requirements of the Act or the regulations on advertising and agreements

Failing to perform contractual obligations to consumers or to give any or adequate redress when in breach of duty to consumers

Misrepresenting the form, nature, purpose or long-term implications of loan agreements.

I reserve the right to report you to the Financial Ombudsman Service and the Office of Fair Trading.

CCA request enclosed.

Regards Redletter.