Card Company Increases Payments

One of Britain’s largest credit card providers is demanding bigger payments from its customers.

MBNA is increasing its minimum monthly repayments from 3% to 5% in September. This is a sure sign that the rates squeeze is spreading.

Borrowers with an average debt of £2,300 will see their minimum payment increase by £46 a month.

Only last month MBNA raised its minimum rate from 2.5% to 3%.

It is thought up to a third of credit card users have had their rates hiked over the last 6 months according to latest research.

About 14% of MBNA customers have seen rate increases over the last 12 months and Egg has increased rates for 11% of its customers. It is when 0% deals come to an end that the huge rate hikes are applied. Some have seen rises of 10% - from 14.9% to 24.9% when their 0% deal ended.

MBNA have said not all customers will have to pay the new 5% minimum but did not say how many would be affected.

Tempted to withdraw cash on your credit card? DON’T!

As the credit crunch continues, credit card companies are heavily promoting cash withdrawals from your credit card but they do not make it clear how expensive this will be.

If you withdraw cash on your credit card you could be charged an interest rate in excess of 24% and also a withdrawal fee.

Even if you are someone who pays off your balance every month you will still be charged interest. This is because the interest starts to accrue from the day you withdraw the cash.

Many companies are also sending their customers blank cheques – with their names already printed on them. This is to entice you to fill in your own amounts and pay them into your bank account – very tempting if you are short of cash. What the credit card company does not tell you is that these cheques are treated the same as a cash withdrawal. Therefore you will be charged a fee and the extortionate interest rate. There is usually a fee of 3% of the amount of each cheque presented and the interest rate will be in excess of 24%.

Nowhere on the covering letter is the interest rate mentioned, just a note asking the borrower to refer to their statement for the interest rate charged.

Using a credit card sensibly is a good way of managing your finances and there are some very good deals out there – however, using them for cash withdrawals or funding your bank account in a great big no no !

Rates are rising, this time its Credit Cards

If you have a credit card, chances are you have seen your interest rate rise recently. The average interest rates for purchases have risen over the last two years from 14.9% to 16.4%.

Borrowing on a credit card has always been considered an expensive way to borrow and as the banks try desperately to claw back the money they leant out, many hard up families will feel the burden of these rate hikes. Of course, the banks will always tell you borrowing on a credit card should be considered for the short term only and if you pay your balance each and every month you won’t notice any difference. This is all well and good but this is the real world and we cant all do that. The banks are not the only ones who are feeling the pinch of our recent economic downturn. Instead of reaching out a hand to fellow sufferers they just want more of your money. Once again it will be those that are already struggling that will be hit the worst, if you can only just afford to make the minimum payment, your debt is growing.

On top of that, the interest rates for cash advances have rocketed in this period from 18.1% to a massive 24.3%. And if that wasn’t enough the fee for taking a cash advance will most likely have increased too. Previously the majority charged a 2% fee with a minimum of £2, nowadays however the majority charge 3%, with a minimum of £3.