Barclays credit cards and libor rates.

[whatnest]

Are libor rates used to set credit card interest rates ? Is it likely claims will be made against Credit card companies in light of Libor scandal ??

[Ruby]

Re: Barclays credit cards and libor rates.

Good question! We will need to wait and see......

[FlamingParrot]

Re: Barclays credit cards and libor rates.

I very much doubt there would be grounds to make any claims because credit card rates have never been linked to anything, unlike mortgages, where rates are often linked to the BoE Base Rate and there were even some linked to LIBOR rates.

At the time the BoE dropped rates to nearly zero to stimulate the economy, many credit cards increased their rates dramatically! :rant: :rant: :rant: :mad2: :mad2: :mad2:

The variation in LIBOR rates is nowhere nearly as wide as interest rates charge for credit, in fact, it was mostly fractions of a percentage point, the reason they were significant was because of the large volume of transactions affected by them. In credit card terms, it would be like, say, paying 23.7% rather than 23.2%, something like that. And credit card rates were not linked.

Mortgages are more likely to have been affected by LIBOR rates.

[PlanB]

Re: Barclays credit cards and libor rates.

I think FP may have posted somewhere else that the Libor rate rigging scandal meant that banks were keeping the rate artificially low not high in order to play down the financial crises so they could keep on doing 'interesting' deals with other banks in other countries :tape:

[Kafka]

Re: Barclays credit cards and libor rates.

The big issue with this will be mortgages, because any unlawful raising of the LIBOR rate can mean a huge amount of extra interest. It remains to be seen whether there are cases where people have been overcharged and whether a suitable reclaim mechanism can be developed. Its also important to establish that the rigging was indeed unlawful and there are signs that this will be established over the next year or so.
http://www.dailymail.co.uk/money/mar...#axzz2KLZF76Be

[FlamingParrot]

Re: Barclays credit cards and libor rates.

I think FP may have posted somewhere else that the Libor rate rigging scandal meant that banks were keeping the rate artificially low not high in order to play down the financial crises so they could keep on doing 'interesting' deals with other banks in other countries :tape:

Indeed! :grin: It works both ways: banks would have rigged the rated up or down depending on what was best for them, they could have kept them low to appear to be a lower credit risk. See this -> http://www.cnbc.com/id/48244741

And it wasn't just Barcraps, virtually ALL the Big Bad Boys :wof: :evil: were involved, UBS was one of the main culprits -> http://www.cnbc.com/id/100326489/UBS...rFixing_Boasts

The effects of LIBOR extend to a number of credit products offered by all financial institutions, there's no direct link between, say, a Barcraps mortgage and Barcraps involvement in the rigging.

[Ruby]

Re: Barclays credit cards and libor rates.

Speaking to the FOS last week, they have set up a department to deal with all libor mortgage/product complaints. They are waiting for the investigation to complete (I assume by the FSA) before they start looking into these complaints. Until that time I get the impression that these cases are just sitting pretty on a pile on someone's desk ! They don't seem to know what and how to handle them. The person I spoke to said that it will hopefully be weeks rather than months before they are able to start addressing the complaints?!

Call me a cynic ................

[CYNthesys]

Re: Barclays credit cards and libor rates.

Come October/November the picture should be clearer, as the first case (as far as I know), Guardian Care Homes v Barclays is listed for a 5-6 week trial to be heard in the High Court

[CYNthesys]

Re: Barclays credit cards and libor rates.

An easy readable summary of the Barclays LIBOR case
http://www.berg.co.uk/latest-news-fr...-barclays.aspx

[Kafka]

Re: Barclays credit cards and libor rates.

Indeed! :grin: It works both ways: banks would have rigged the rated up or down depending on what was best for them, they could have kept them low to appear to be a lower credit risk. See this -> http://www.cnbc.com/id/48244741

And it wasn't just Barcraps, virtually ALL the Big Bad Boys :wof: :evil: were involved, UBS was one of the main culprits -> http://www.cnbc.com/id/100326489/UBS...rFixing_Boasts

The effects of LIBOR extend to a number of credit products offered by all financial institutions, there's no direct link between, say, a Barcraps mortgage and Barcraps involvement in the rigging.

I am very grateful to my avian friend for raising this important issue.

The way I see this is that if a particular bank is shown to have been involved with fraudulent rigging of LIBOR, then any customer of that bank who can demonstrate a loss through artificial raising of their interest rate could have a cause for redress. That's a number of very big IFs, but it's possible to imagine a scenario where action can be taken, and a number of us have our eyes on the ball to watch developments. I expect that firms that have lost out will spearhead this, but there will be many individual cases as well.

In my case I have a subprime mortgage now with its third owner and based upon a band of loading above LIBOR, with a maximum and minimum in the range. My initial enquiries suggest that at times they were charging more than the max anyway, which clearly breaches the agreement. However, I have been holding back until the house is sold and even then it will probably be wise to see what happens with the court cases, though the combination of charging a higher rate than the agreement permitted and proof of fiddling rates (if to my additional disadvantage) would be useful.