Rate Jacking Article Discussion

A question about : Rate Jacking Article Discussion

I recently encountered this very same issue with Vanquis, who I phoned to discuss. They had stated that they would be increasing my interest rate by 10%. When I spoke to an advisor at Vanquis and asked why were increasing the rate by so much she told me that it was because THE GOVERNMENT HAD INSTRUCTED THEM TO. I was stunned and asked her to repeat what she had just said, which she did. I then relayed it back to her and asked her to confirm what she had said, which she did and agreed to. She claimed that Vanquis had no part whatsoever in the interest rate rise and that this was solely down to the Government. I asked her to confirm what she was saying with a colleague, which she did....

What i find most disturbing about this is that vanquis target poorer rated customers, who very often are in their financial position because of their lack of knowledge about financial matters, rather than them being overspenders etc (i unfortunately fell into the latter category). This means that they will take what they are told at face value and actually believe this absolute lie that was told to me by Vanquis (I confirmed that the call was recorded and I would be able to get a copy of the conversation transcript). Therefore there are potentially tens of thousands of Vanquis customers who may call and be told these lies and feel they have no rights to appeal.

By the way, I wrote to Vanquis to say I wanted to close my account at the current rate. Six weeks later when i called them, they denied they had received my letter, sent recorded delivery. What's worse is that they denied they had even sent ME a letter and that my interest rate was unchanged, this despite the fact that i was reading excerpts of the letter to them over the phone. They asked me to fax a copy of THEIR letter to them. It took about three months for the matter to be resolves. They insisted on sending a new card, which they told me I had to activate but claim it will keep me on the previous interest rate. For some reason I don't think I have heard the end of this one.

I have polished my moneysavingexpert boxing gloves in preparation for my next fight with them...

Best answers:

• I recently encountered this very same issue with Vanquis, who I phoned to discuss. They had stated that they would be increasing my interest rate by 10%. When I spoke to an advisor at Vanquis and asked why were increasing the rate by so much she told me that it was because THE GOVERNMENT HAD INSTRUCTED THEM TO. I was stunned and asked her to repeat what she had just said, which she did. I then relayed it back to her and asked her to confirm what she had said, which she did and agreed to. She claimed that Vanquis had no part whatsoever in the interest rate rise and that this was solely down to the Government. I asked her to confirm what she was saying with a colleague, which she did....
  What i find most disturbing about this is that vanquis target poorer rated customers, who very often are in their financial position because of their lack of knowledge about financial matters, rather than them being overspenders etc (i unfortunately fell into the latter category). This means that they will take what they are told at face value and actually believe this absolute lie that was told to me by Vanquis (I confirmed that the call was recorded and I would be able to get a copy of the conversation transcript). Therefore there are potentially tens of thousands of Vanquis customers who may call and be told these lies and feel they have no rights to appeal.
  By the way, I wrote to Vanquis to say I wanted to close my account at the current rate. Six weeks later when i called them, they denied they had received my letter, sent recorded delivery. What's worse is that they denied they had even sent ME a letter and that my interest rate was unchanged, this despite the fact that i was reading excerpts of the letter to them over the phone. They asked me to fax a copy of THEIR letter to them. It took about three months for the matter to be resolves. They insisted on sending a new card, which they told me I had to activate but claim it will keep me on the previous interest rate. For some reason I don't think I have heard the end of this one.
  I have polished my moneysavingexpert boxing gloves in preparation for my next fight with them...
• The rate on my Egg card jumped last year from 16.9% to 29.3%
  I have complained at regular intervals to get the rate reduced but without any success.
  The last message from Egg was to say that my rate was fixed and couldn't be changed.
  When I queried this, they changed to saying that the rate was variable but they didn't have the power to reduce it!!
  I'm waiting for a reply to my question 'Well, who does have the power to reduce the rate?'
  Don't expect an answer.
  Bad credit rating means that I can't move the debt. I'm giving priority to paying off the card and it hasn't been used in years.
  If anyone knows how to tackle these robbers then let me know.
  Graham
• Hi,
  My partners MBNA card jumped earlier this year from 21.9% to 29.9%. He didn't fix as the card had not long before jumped from 18.9% to 21.9%, and we felt 21.9% was so high he was told there would be a possibility of reducing the rate again in 6 months (turns out there wasn't...).
  My main issue with it is that they raised it from a manageable rate (18.9%) where we were lowering the balance to an unmanageable rate prior to the legislation offering to freeze, as they knew that the new legislation would be coming in. Therefore they could fall within the law offering a freeze at 21.9%.
  We've just sent our official complaint letter and after 8 weeks will be going to the ombudsman. It is not good practice to raise rates so much as to make it impossible to pay over the minimum amount and all we want is a fair rate where they make money but we are able to pay off our debts.
  I wouldn't recommend MBNA to anyone.
• I've had a Debenhams card for 6 months. This is actually issued by Santander (aka Abbey).
  Today, out of the blue, I received a Debenhams Gold Card - not asked for, but easy on the eye! With it, a letter telling me that my existing card was no longer valid.
  HOWEVER - I happened to notice in the small print that if the card was an upgrade (which this one is) then the balance transferred would be charged at a higher rate of around 28% APR (10% higher than the card it came from).
  This is plain, simple, robbery!! The account will be closed by the end of the week.
• HOW CAN THIS BE ALLOWED TO HAPPEN?!?!? I know its not against any laws but surely its highly unethical. If I borrow money at a certain rate I cannot see how the person I borrowed from can decide to increase the agreed rate. If that was allowed then every lender could just decide to make more money when it suited them(oh wait ...that's what's happening). Its just plain wrong. Why when you get a mortgage can't you get a deal that last for the term of the mortgage? Why must it be variable? I know the answer but its just not right!!!! I think the article was brilliant and well written, but its really just damage control. We need something else to stop the companies doing this. Other than getting the law changed the only thing I can think of is to name and shame and then get EVERYBODY to shun these certain companies. lost sales is the only thing these people care about. But the problem is getting people to agree to this idea.... can anyone else think of a better way to fight back at these thieves?? I mean we lock our doors to protect from burglars, yet the biggest thieves get access to our bank account!!!!! Sorry for ranting but this has really upset me.
• Capital One claim that they wrote to me on 20th July stating that I had the option to retain the same rate if I contacted them by 20th August. It had not been received by the time I left on holday (after the post was received on Saturday 25th July). The letter simply says 'July 2009'.
  It was waiting for me when I returned from holiday on Monday August 11th. Then a family illness, and subsequent death took me over the 20th (obviously my family should come second to their self imposed deadline:rolleyes. When I approached them, politely, I was told to contact their Executive department who contacted me and told me that while they sympathised I hadn't called them in time regardless of my circumstances.
  I asked that they put it in writing, which they have. Interestingly this letter, dated 8th September and sent under the same 'Mailsort' type of envelope with a First Class pre-printed post mark, was received on Saturday 12th!!!
  Anyway before I respond I need to check what exactly the 30 days minimum period of notice constitutes. Similar e-mails have been sent to APACS and the Business Innovations & Skills department (which appears to have superceded the department which negotiated the Principles on Repricing.
  I'll let you know any response because 30 days could easily be 25 or less. Woe betide if you go on holiday and/or someone dies!
  The gist is:
  Sirs
  I refer to the above agreement between APACS and the government which came into force on January 1st.
  https://www.hiow.gov.uk/agendas/2009/Annex%20to%20be%20circulated%20with... inutes.pdf
  I would appreciate clarification on the following point contained within the factsheet
  https://www.choosingandusing.com/resources/documents/CreditCardFactsheet...
  A credit card company that is increasing its rates will give 'at least 30 days notice' if it is as a result of risk re-pricing. Please confirm the definition of 30 days. Is it intended to be:
  1) 30 days from the decision being made but before a letter is actually put in the post.
  2) 30 days from the precise date a letter is sent out
  3) 30 days from the presumed date of receipt by the customer
  4) Some other definition (if so I would appreciate confirmation of what that definition is).
  Is it intended that the burden of proof in relation to the date the letter was physically sent out lays with the card issuer?
  I look forward to hearing from you as soon as possible.
  Regards
• I know we all know this already, but I'd like to put on record that this is an excellent article. Where else do you get such well-researched, factually-based, step-by-step advice as this?
  Another solid reason why Mr Lewis needs to become Sir Martin Lewis. Give this man a knighthood!
• Virgin have just written to me telling me of a change to my rate. I originally took the card out to make use of their very generous 0% balance transer offer. Unfortunately I missed a payment by one day so my rate was hiked up and they refused to budge. Since then I've been doing my best to make more than the minimum payment to get rid of it as soon as possible, only to be told that my rate is increasing.
  They also gave me a colossal credit limit and keep encouraging me to make use of it, thankfully I haven't.
  The only good thing is that without this website it would be so easy to just accept your lot and get more and more stressed and worried about things. At least now I know that I'm not the only one and there are some practical steps I can take. I think I'm going to close the account and negotiate a reasonable time to repay the outstanding balance.
  A whopping big thank you to Martin, his team and all the very many forum users.
• I am a little surprised that this thread has not been more vigorously discussed (and not just because I'm posting in it). I think it's going to be more and more of an issue as Martin has highlighted.
  This site exists to allow the consumer to know their rights, and in terms of 'Risk re-pricing' I have now received a definitive response from the UK Cards Association.
  If you get a letter from your credit card, make a note of the date it was received. It won't help you get the decision changed, but I can definitively state that in the case of Capital One it will hopefully help me show that their notice was null and void.
  Anyway, here's the response.
  My colleague who manages our general email box has passed to me your recent query about the appropriate level of notice you should receive of any re-pricing decision.
  We would expect you to receive 30 days clear notice (whether in writing or any other medium) before the risk-based re-pricing takes effect. So if you receive a letter today, saying that risk-based repricing on your account would take effect from 19th October then that would be sufficient notice, but if you received that letter on Monday, then it wouldn't be. Obviously during a postal strike, that'll cause an issue.
  If you do have any concerns that you've not received appropriate notice, you should go back to your credit card company with your concerns and ask them to address them. If you have an unresolved dispute, you can then refer that to the Financial Ombudsman Service. The principles agreed last year between the industry and Government are enforced and monitored by the Banking Code Standards Board.
• 2 issues with us, firstly HSBC. We have various cards at the moment which since around June last year we are paying off in order of highest interest first as everyone recommends, as HSBC card was way down on the list (15% APR compared to A&L at 34%) we paid min on this and have been overpaying on the others first, consequently I have noticed HSBC have sneakily been increasing the APR on this card, it is now up to 20.9% despite never missing a payment or making a late payment, they have never ecven had the courtesy to write informing us of this, are they allowed to do this?
  On top of this, Egg have just emailed me a coupkle of weeks ago to tell me they are increasing my APR from 17.9% to 21.9% from October, this again is despite never missing a payment and making an overpayment every month of Ј50, the only way to avoid this I am told is to close the account immediately and make at least the min payment every month until the balance is cleared, so this is what I have done, again Egg wasn't at the top of the list.
  What gets me so mad is that I feel that despite not making any late payments or missed payments on any of our debts, no adverse stuff on our credit files at all, the only thing we have against us is high outstanding level of unsecured debt (just under Ј40k but we have a combined annual income of Ј80k)
  We are being responsible by ensuring we meet our committments every month and are overpaying as much as we can each month to pay it all off but for some reason, they are all deciding we are a 'risk' and therefore are increasing our APR's as much as they can possibly get away with just to lengthen our time to repay and make more profit for themselves.
  I can't understand how they can get away with this when we have nothing adverse on our files. What is the point in just overpaying the highest bearing interest debt first when all the other creditors then start to hike up the rates? it makes a complete mockery of snowballing, I am beginning to wonder if I should just spread the money we allocate to debt repayment each month fairly amongst each creditor so each gets overpaid substantially each month, at leats then they may stop hiking up the rates anymore
• I was under the impression that they would have had to search your files (as you agree to when you sign up) to increase on a risk basis. I was surprised when I checked that no credit card company has searched in the last year on my Experian report. However the guidance sheet above explains when this might occur (bottom page, right hand side).
  https://www.choosingandusing.com/reso...dFactsheet.pdf
  The 'regularly uses a high proportion of credit limit' is self explanatory. It means they don't even need to search the files. By using a high proportion of your limit there is a presumption it's because you're stretched.
  As for HSBC - they have to send notice of any increases in your APR. Give them a call and ask them when they did this.
  Hope that helps a little
• Thanks for that. Makes sense I guess. A load of footprints on your Experian record would make it look like you're applying left right and centre or that your card companies have concerns which they're following up.
• Hi all,
  My Credit Card rate was upped just days before the new rules regarding freezing and closing the card came in to play. As such I had no option to reject it (which i most certainly would have done).
  I feel that the timing was specifically to sneak it in before the rule change but does anyone think this is reason enough to complain or would I be better not wasting my time?
  Thanks in advance,
  DM
• DebtMagnet - I completely agree, ours was upped in the months running up to the legislation coming into place. The increase made it pointless to freeze it. We've sent a complaints letter asking for the rate to be frozen prior to the initial rate increase. Not sure if we have a chance, but will go to the Ombudsman when mbna don't reply!!
  One thing I do get mad with is that it seems you have to default to get anywhere with the company. The companies think that a rate increase is ok if you can meet payments, even though that could well tip you over into defaulting. As a business model it makes no sense to me!
• Bank of Scotland has increase mine from 14.95 to 19.95% without no knowledge or letters. The change has just appeared on my September statement along with a list of changes to Terms and conditions. But these have no mention of interest rate. And last months statement is just the old amounts and again nothing mentioned or any notice given.