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Interest Rate Increases - Can they be Penalties?
Hi
I'm new to Legal Beagles and haven't had time to read everything yet - so please forgive me if I cover old ground.
I'm concerned about the excessiove interest rates I'm being charged by Egg. I was one of the 161,000 cards they withdrew earlier in the year. I have been pursuing a claim for repayment of penalty charges - they have, so far offered to repay the difference between the £20 they used to charge and the £16 they now charge - but no interest. I have declined. But it got me a bit angry and I started looking more closely at the interest rate being charged.
I currently pay a massive 26.9% APR - far above the original agreement. So a few months ago I phoned and asked why it was so high. The person I spoke to at the time (unfortunately I didn't take their name) said it was because I had been overlimit and had paid late on a few occasions. They also said if payments were made regularly over 6 months Egg might revew and reduce the interest rate.
So I called again and pointed out I had paid on time and well over the minimum required for at least 6 months - could they now reduce the interest rate. They said no. So I asked again why it was so high? This time they said it was "a complex issue" but it was a combination of my credit rating and "the previous management of the account". I asked specifically if making a late payment would affect the interest rate charged. They had obviously been briefed on this question and vehemently denied they had ever said that. But later the Team Leader admitted it was "one of the factors" they took into account.
If a bank (like Egg) were to raise the interest rate on a credit card as a result of the customer making a late payment then, presumably, there would be a case that this was, in fact, a "penalty" charge and potentially unlawful under the unfair terms and conditions legislation - as per the arguments going on in Court re the bank charges??
The challenge would be (I guess) proving this to be the case??
Of course the Bank would undoubtedly argue that interest rates are "core terms" of the credit agreement and therefore not subject to discussion under UTCCR. It is clear, however, from OFT guidelines that this is NOT the case and that terms affecting the variation of interest rates COULD be considered as unfair terms....
Here's another possibility - what if a bank - wanting to reduce its risk, reviewed all its accounts and decided to terminate all credit cards where the customer had a credit rating below a certain level. But, before doing so they increased the interest rate on all those accounts before writing to them to cancel the agreement?
Of course, it would be libelous of me to suggest Egg would ever consider doing such a thing and I'm sure the rate increase I had in December before receiving the letter of termination in January was pure coincidence. But I was wondering if there were any experiences other members had relating to interest rate hikes?
I'm new to Legal Beagles and haven't had time to read everything yet - so please forgive me if I cover old ground.
I'm concerned about the excessiove interest rates I'm being charged by Egg. I was one of the 161,000 cards they withdrew earlier in the year. I have been pursuing a claim for repayment of penalty charges - they have, so far offered to repay the difference between the £20 they used to charge and the £16 they now charge - but no interest. I have declined. But it got me a bit angry and I started looking more closely at the interest rate being charged.
I currently pay a massive 26.9% APR - far above the original agreement. So a few months ago I phoned and asked why it was so high. The person I spoke to at the time (unfortunately I didn't take their name) said it was because I had been overlimit and had paid late on a few occasions. They also said if payments were made regularly over 6 months Egg might revew and reduce the interest rate.
So I called again and pointed out I had paid on time and well over the minimum required for at least 6 months - could they now reduce the interest rate. They said no. So I asked again why it was so high? This time they said it was "a complex issue" but it was a combination of my credit rating and "the previous management of the account". I asked specifically if making a late payment would affect the interest rate charged. They had obviously been briefed on this question and vehemently denied they had ever said that. But later the Team Leader admitted it was "one of the factors" they took into account.
If a bank (like Egg) were to raise the interest rate on a credit card as a result of the customer making a late payment then, presumably, there would be a case that this was, in fact, a "penalty" charge and potentially unlawful under the unfair terms and conditions legislation - as per the arguments going on in Court re the bank charges??
The challenge would be (I guess) proving this to be the case??
Of course the Bank would undoubtedly argue that interest rates are "core terms" of the credit agreement and therefore not subject to discussion under UTCCR. It is clear, however, from OFT guidelines that this is NOT the case and that terms affecting the variation of interest rates COULD be considered as unfair terms....
Here's another possibility - what if a bank - wanting to reduce its risk, reviewed all its accounts and decided to terminate all credit cards where the customer had a credit rating below a certain level. But, before doing so they increased the interest rate on all those accounts before writing to them to cancel the agreement?
Of course, it would be libelous of me to suggest Egg would ever consider doing such a thing and I'm sure the rate increase I had in December before receiving the letter of termination in January was pure coincidence. But I was wondering if there were any experiences other members had relating to interest rate hikes?
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