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Can Barclaycard change the interest rate on a card without any communication.

by James Purdie 12 June 2010 |

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My girlfriend has been paying off a substantial debt on her Barclaycard at an arranged rate of 3%. Recently she managed to pay off another card so upped the payments she was making to the Barclaycard. As a consequence Barclaycard have upped the interest rate they are charging her to 12.9% meaning that her new £60 / month payment is only paying off £30 of debt. By doubling her payments she has made no headway on paying off her card as it has all been taken in increased interest. She would have been better off sticking at the original payment of £30 / month.

Can they do this?
Is there anything we can do?
Should they have let her know that they would be doing this before accepting her request to up the monthly payment?

Any advice gratefully received.

James.

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153

JoeEasedale posted
3% is not the standard rate for the card? It is the minimum payment?
By the sound of it, they have agreed to reduce the rate for a period and are now moving it back towards normal?
It all depends on how the rate was agreed in the first place, but changes to STANDARD rates would be advised via statements. No one needs to renegotiate to up a payment.
Your post suggests that the rate has junped from 3% to 12.9%, but from what you have written I doubt that this is the case.
You need to be a bit clearer about the history and who agreed what for how long.
Posted on 12 June 2010 | Love 0 loves Report
804

MikeGG1 posted
James
You don't appear to have correct information.
Are you absolutely sure that INTEREST rate was 3%. That sounds more like the minimum payment amount.
Even an interest rate of 12.9% is very low for a card these days. We hear lots of tales of 26.9%.
Has she been on a promotional rate and that has now expired? If that is the case then they don't have to give notice because it was part of the original terms and conditions. However, a warning might be a good idea, although that could only be a couple of lines on the statement immediately prior to the change.
It might be just coincidence that both changes occurred at the same time.
If you state the old balance, interest, spend and new balance for the 2 months we can check it out.
Mike
Posted on 12 June 2010 | Love 0 loves Report
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James Purdie posted
Thanks for the responses.
3% is not the minimum payment but was the interst rate (0.25% / month).
This rate was an arrangement with Barclaycard because the debt was unmanageable at a more usual rate. They agreed this rate to enable the debt to be repaid.
As soon as payments to the card have increased they have reviewed the rate charged and consequently the increased payments actually now result in the c£3K debt actually costing more (£3k @ 3% @ £30/month = c£3400 £3k @ 12.9% @£60/month = c£4200)
Is it reasonable for Barclaycard to up the interest rate in this way especially as they originaly agreed the low rate because the debt was otherwise impossible to pay off. The increased rate now means that the debt is costing more because my girlfriend has been able to afford a slightly higher monthly payment.
Any suggestions?
Posted on 12 June 2010 | Love 0 loves Report
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JoeEasedale posted
It is very reasonable of them.
1. There would have been no agreement to maintain a low rate for any specific time, unless it was say "3 months to review".
2.To get a discount, Barclaycard have responded to a debt situation in a positive manner and you should be applauding them for that., they had no compulsion to lower the rate.
3.Naturally, when one is snowballing debt, there comes a time, as the pressure comes off, when repayments to one card can go up. If that is all that has happened and there has been no material change then a submission to barclaycard with an updated statement of affairs and a request for continued low interest rates MIGHT have born fruit, but it sound like there was simply an increase by your girlfriend to the payment because she could AFFORD to pay more. If so, not keeping the company informed fully, is STUPID, and costly., they could conclude that they have been led down the garden path in the first place.
Anyway it is evident that she is in better financial condition than she was before. Companies rarely reduce rates forever., at best (and many wont reduce them at all) they will give a helping hand for a few months or even a year or two whilst the debtor gets back on their feet. It is a breathing space, no more, and your girlfriend should be grateful for that, and not expect an artificial rate to go on forever.
Posted on 13 June 2010 | Love 0 loves Report
804

MikeGG1 posted
Your girlfriend should have forewarned them that this was going to happen and was only part of the ongoing debt situation.
It will be much more difficult to get the to return to the 3% rate than it would have been to get them to stay on it for a bit longer.
It could well be that they would still have upped the rate as the pressure reduces as each debt clears, but it might have been to an intermediate rate.
She is still on a low rate for a card and will still be paying off more than she was.
Barclaycard should be applauded for having given her the breathing space and she should also be applauded for her efforts so far.
Mike
Posted on 13 June 2010 | Love 0 loves Report
83

SmudgeButt posted
James - I can't believe that any bank would increase an interest rate withinout some notice. Normally if this is happening it is via the monthly statement. Admittedly this is not always easy to spot but might be "if you pay just your minimum balance your estimated interest on your next statment will be £XX"
But if they did say "interest rate will be 3% for XX months" and haven't stuck to that I think there is cause to go back and ask questions. Likewise if there was nothing on the statement to indicate a change - time to ask - politely obviously. And be prepared to wait for an answer - it could take months - but keep paying in the meantime no matter heart rending it can be at times.
Posted on 14 June 2010 | Love 0 loves Report

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