Agreement question

[alangee]

Where do you stand when you take out a credit card agreement which gives you a lifetime fixed rate to transfer balances, then maybe a couple of years later increases that rate by fourfold?

I know that terms & conditions can be changed at any time, but this would be a major change insofar as that was the possible reason for choosing that card, and most of the balance could be that transferred. Surely this would become an unfair term.

Alan

[Paul.]

Re: Agreement question

If the terms say fixed for balance transfers for the duration then thats what it is. I cannot see the creditor can change this without your express agreement

[PlanB]

Re: Agreement question

Alangee. Check for any small print in the Ts & Cs which says that if you default on your monthly payments they can cancel the deal and charge what the hell they like I know that can often happen when you buys goods which are advertised as "interest free" for the first 12 or 48 months etc

[alangee]

Re: Agreement question

If the terms say fixed for balance transfers for the duration then thats what it is. I cannot see the creditor can change this without your express agreement

Paul

What it actually said was that any balance transfers made in the first six months of account would be charged at rate of 0.48% per month. Any balance transfers made after that six month period would becharged at 0.97% per month.

This 0.48% charge continued for about 4 years until it suddenly changed to the normal purchase interest rate, which meant the rate quadrupled. On the same statement, the rates shown changed from a monthly rate to a yearly rate.

I have the card carrier from the month it changed which says for balance transfers "an effective rate of 5.94% p.a. fixed for any balance transfer made prior to the day after your August 2004 statement".

I had a limit of £4000, and transferred a balance of £3900, so I cannot believe that it had been paid in full over that 4 year period.

Up to that time, I had never defaulted.

Alan

[PlanB]

Re: Agreement question

Paul

What it actually said was that any balance transfers made in the first six months of account would be charged at rate of 0.48% per month. Any balance transfers made after that six month period would becharged at 0.97% per month.

This 0.48% charge continued for about 4 years until it suddenly changed to the normal purchase interest rate, which meant the rate quadrupled. On the same statement, the rates shown changed from a monthly rate to a yearly rate.

I have the card carrier from the month it changed which says for balance transfers "an effective rate of 5.94% p.a. fixed for any balance transfer made prior to the day after your August 2004 statement".

I had a limit of £4000, and transferred a balance of £3900, so I cannot believe that it had been paid in full over that 4 year period.

Up to that time, I had never defaulted.

Alan

I'm rubbish with maths but wouldn't 0.48% per month be the same thing (more or less) as 5.94% pa Some banks express the interest rates this way to delude customers into thinking it's a great low rate when in reality it isn't. The AER vs APR con has not yet been settled.

Might there also be an issue with payment hierarchy? Until recently creditors allocated your money to pay off the balance attracting the lowest interest rate first so you never got to reduce the balance with the highest interest rate (typically cash withdrawals). That unfair practice has now been stopped Could your monthly repayments have been used to clear the balance of the initial balance transfers first, so that the amount outstanding for purchases made on your card during all the years beforehand didn't get reduced, and your repayments only started to be credited against them once you'd paid off the balance transfers Does that make any sense?

Without seeing all the statements it's hard to predict what has happenend with your interest rate changes. You'll probably have to create a spreadsheet to figure it all out

[alangee]

Re: Agreement question

Hi PlanB

Yes you are correct. 5.94% is the same as 0.48% monthly, but they reverted to the purchase rate which was around 21% per annum. I should have made myself clearer and added the purchase rate.

I should also add that I received a new card that month as well.

I suppose that it is possible that the transfer had been paid off in 4 years, but there was no notification of that (maybe there should not be), nothing from the statements or anywhere else to denote that it had been paid. It also seems strange that the month this all changed, the creditor changed his method of displaying credit percentages from monthly to yearly.

Alan

[PlanB]

Re: Agreement question

How about this:

the balance transfers were £3,900

the minimum monthly repayment was 2% (just guessing) = £78 pcm

in four years you would have paid back £3,744 (78 x 48)

So could that mean you had paid off all the balance transfers by the time the rate on your card was changed to 21% which then kicked in for all those other transactions (cash withdrawals & purchases) you had made over the previous four years when the greedy bank hadn't been crediting a bean of the hard-earned dosh you had been giving them each month