Loans to pay off overdrafts & cards ???

[Pen]

Hi Pm I have PMed you with my email address, i have always wondered how to calculate this thanks PM

[photoman]

Right everyone

 

I'M BUMPING THIS THREAD !!!

 

I really think this is a very much overlooked area of claims.

 

A lot of people get themselves deep into debt with their Banks due in great part to penalty charges.

 

The Banks then "offer" (... more like "consolidate your debts into a loan, or we'll take recovery action) a loan !!

 

The simple act of matter in such circumstances is, that they are obviously profiting further in a material sense from the additional interest upon the loan that is due to repayment of the original charges !!

 

Now, the reason I am reviving this thread now, is I have two claims on the back burner that I am planning to start action on this week.

 

I have calculated the charges, and the interest levied upon the same account as per the usual format of claims.

 

I have also started calculating their subsequent gains from further interest upon consolidatio loans taken with the same bank over the period.

 

The results are quite shocking.... a veritable paper chain of :

 

penalty charges (and interest on account)....then loans to clear O/D incurring more interest due to charges.... resultant strain on finances giving rise to O/D on initial acccount... further loans to clear... further interest....further charges... another loan etc etc etc

 

The extra interest they are gaining just from the initial charges is not confined to just that on the account the charges were applied to... it snowballs.. and their gains are ever increasing.

 

I will not pretend that this is easy to work out, it is complicated and intricate, and their extra gains are sometimes hard to spot.

BUT.. I think that even in the course of settling our usual claims, they rely upon the fact that we have not accounted for these sums.

 

For all those who can be motivated to make the effort, I implore you to do so.... the results will shock you !!

 

PM

[elizabeth1]

Yes - Photoman you are so right with this.

 

Ourselves - we had whole string of related charges through Bank accounts - these kicked into loan accounts, mortgage accounts, yes they do add up to huge sums.

[photoman]

This is the issue I am trying to bring peoples awareness to:

 

Consider an example scenario:

 

You have an account, and run up a £1000 overdraft.

Say for example £500 of that O/d is charges.

First off that means you pay for example 18.5% p.a. interest on the extra £500, (which we all do presently try to account for in our claims)

You then take a consolidation loan to repay the £1000, at say 15% p.a. which will be paid by monthly installments from the original account.

This means that you are paying an additional 15% p.a. (compounded over the course of the loan) on the initial £500 and also on the extra overdraft interest you've already given them.

PLUS... because you are repaying it each month from your account, this could mean, that because of all the extra interest, you are more overdrawn on that account than you should be, and so also end up paying yet another 18.5 % p.a (compounded over the period of the loan) o/d interest from your original account to cover the extra interest you are paying out on the loan.

 

So in short:

They give you penalty charges & charge you interest on them.

They then charge extra loan interest on these charges and interest.

They then charge you extra o/d interest on the extra loan interest.

 

This means they have hit you 3 times over with additional interest (all compounded) on the initial charges.

 

Then of course there is the increased repayment insurance, because the loan is bigger than you really needed... along with the extra interest on the bigger premiums you need pay for the insurance !!

 

.....It's not so obvious that all this is the case, until you start to analyse it this way..... and that's probably just the way they like it !!