MBNA 0% For 15 Months

[basketball33]

MBNA Bank Canada is changing the way it calculates minimum payments on its credit cards, starting with its August statements.

This will result in hefty increases for customers who pay only the minimum each month.

Dave Morgan, for example, was informed that the minimum payments on his low-rate MBNA MasterCard will go from $60 to $465 a month (based on his March balance).

He now pays only the interest, plus $10, to keep his account in good standing. In future, he will pay the interest, plus 1 per cent of the balance.

Morgan’s credit card has a 1.99 per cent rate, which was promised to last indefinitely. He’s afraid that if he misses the payment deadline once the higher minimum comes in, his low rate will be jacked up.

“The increase will cause financial hardship for me and my family,” says Morgan, who’s 60 years old and retired.

“MBNA has found a way to get out of their obligation with me and probably thousands of other people who went into a contract with them at a rate that would never change.”

Rebecca, who prefers to use only her first name, also has a 1.99 per cent rate on an MBNA credit card taken out in 2008.

She’s been told her minimum payment (based on her March balance) will go from $79 to $474 in August – an increase that comes at a bad time, since she’s trying to sell a house which was renovated and the work charged to the card.

“I had every intention of fully repaying the $41,500 I had borrowed,” she says. “It may take longer than I had originally anticipated.”

In its letter to customers, MBNA says it’s bringing its minimum payments into line with industry practice.

“It is the right thing to do, as it helps customers pay down their credit balances faster and ultimately pay less in finance charges in the long term,” says Cathy Velazquez, an MBNA Canada spokeswoman.

New federal rules coming in September will force credit card issuers to tell customers how long it will take to pay off their outstanding balances – in years and months – if they hand over only the minimum payment on each due date.

Many credit card issuers calculate a minimum payment that covers the interest owing and a percentage of the balance, says Julie Hauser, a spokeswoman for the Financial Consumer Agency of Canada.

If the minimum payments cover only the interest, customers will never pay off their outstanding credit card balances and will be in debt in perpetuity.

“The new regulations are aimed at limiting business practices that are not beneficial to customers,” she says.

The FCAC has a credit card payment calculator at its website, http://www.fcac.gc.ca, which shows how much of a difference it makes to pay more than the minimum amount.

Credit card issuers have to give 30 days’ notice of any contract changes, Hauser says, and MBNA gave close to 60 days’ notice in this case.

The 1.99 per cent rate that MBNA customers such as Dave Morgan and Rebecca enjoy depends on their making minimum payments before the due date.

Morgan says his 1.99 per cent rate went up to 19.99 per cent last January because he was apparently one day late. When he called to say he paid on time, he found out there was a computer problem and he would get back his extra payments (about $400).

Most customers pay more than the minimum each month, Velazquez says.

“We understand that some customers may have difficulty meeting the new minimum payment requirement and we will work with them on an individual basis,” she promises.

MBNA agreed to extend low minimum payments to customers when times were good. Now it’s taking them away, resulting in hardship for some people whose interest rate will go up tenfold if they can’t pay on time.

Sounds like a double whammy to me.

[Ryu69]

MBNA Bank Canada is changing the way it calculates minimum payments on its credit cards, starting with its August statements.

This will result in hefty increases for customers who pay only the minimum each month.

Dave Morgan, for example, was informed that the minimum payments on his low-rate MBNA MasterCard will go from $60 to $465 a month (based on his March balance).

He now pays only the interest, plus $10, to keep his account in good standing. In future, he will pay the interest, plus 1 per cent of the balance.

Morgan’s credit card has a 1.99 per cent rate, which was promised to last indefinitely. He’s afraid that if he misses the payment deadline once the higher minimum comes in, his low rate will be jacked up.

“The increase will cause financial hardship for me and my family,” says Morgan, who’s 60 years old and retired.

“MBNA has found a way to get out of their obligation with me and probably thousands of other people who went into a contract with them at a rate that would never change.”

Rebecca, who prefers to use only her first name, also has a 1.99 per cent rate on an MBNA credit card taken out in 2008.

She’s been told her minimum payment (based on her March balance) will go from $79 to $474 in August – an increase that comes at a bad time, since she’s trying to sell a house which was renovated and the work charged to the card.

“I had every intention of fully repaying the $41,500 I had borrowed,” she says. “It may take longer than I had originally anticipated.”

In its letter to customers, MBNA says it’s bringing its minimum payments into line with industry practice.

“It is the right thing to do, as it helps customers pay down their credit balances faster and ultimately pay less in finance charges in the long term,” says Cathy Velazquez, an MBNA Canada spokeswoman.

New federal rules coming in September will force credit card issuers to tell customers how long it will take to pay off their outstanding balances – in years and months – if they hand over only the minimum payment on each due date.

Many credit card issuers calculate a minimum payment that covers the interest owing and a percentage of the balance, says Julie Hauser, a spokeswoman for the Financial Consumer Agency of Canada.

If the minimum payments cover only the interest, customers will never pay off their outstanding credit card balances and will be in debt in perpetuity.

“The new regulations are aimed at limiting business practices that are not beneficial to customers,” she says.

The FCAC has a credit card payment calculator at its website, http://www.fcac.gc.ca, which shows how much of a difference it makes to pay more than the minimum amount.

Credit card issuers have to give 30 days’ notice of any contract changes, Hauser says, and MBNA gave close to 60 days’ notice in this case.

The 1.99 per cent rate that MBNA customers such as Dave Morgan and Rebecca enjoy depends on their making minimum payments before the due date.

Morgan says his 1.99 per cent rate went up to 19.99 per cent last January because he was apparently one day late. When he called to say he paid on time, he found out there was a computer problem and he would get back his extra payments (about $400).

Most customers pay more than the minimum each month, Velazquez says.

“We understand that some customers may have difficulty meeting the new minimum payment requirement and we will work with them on an individual basis,” she promises.

MBNA agreed to extend low minimum payments to customers when times were good. Now it’s taking them away, resulting in hardship for some people whose interest rate will go up tenfold if they can’t pay on time.

Sounds like a double whammy to me.

yeah, the 1% minimum payment has been on new customers like me. i guess they are finally hitting the existing customers now.

[djino]

I still have yet to be hit, but I also pay more than the minimum. I'd say at least $50 more / month than the minimum.

djino

[bfoot]

This is my second MBNA credit card, applied in mid May, got a call the next day. I had a $10K limit on the smart cash credit card, the person at MBNA wouldn't give me more credit but offered to split my limit from existing credit card to this new one, I said yes to 50/50 split. Got the new card today, surprisingly, I was given a $10K limit on this new card. So now in total, I have $15K limit from MBNA. I did the balance transfer this morning. Good free money until next September.

Thanks OP for this credit card.

[@DealHunter@]

This is my second MBNA credit card, applied in mid May, got a call the next day. I had a $10K limit on the smart cash credit card, the person at MBNA wouldn't give me more credit but offered to split my limit from existing credit card to this new one, I said yes to 50/50 split. Got the new card today, surprisingly, I was given a $10K limit on this new card. So now in total, I have $15K limit from MBNA. I did the balance transfer this morning. Good free money until next September.

Thanks OP for this credit card.

I dont know about the "free" statment...

[angel_wing0]

I dont know about the "free" statment...

agreed.

[flito ray]

question -- my balance is due in june, how far in advance should i try applying for a new mbna 0% promo so that i can carry it forward another year? anyone know?

[djino]

i ask him if he has to pull my credit again and he said yes, so it'll be one hard hit today and another when i re-apply

ouch

Of course they'd need to pull again, how else would they verify? They will need the full credit picture again when you reapply.

djino

[angel_wing0]

well applying = hard credit pull.

[angel_wing0]

mbna does hard pull everytime you apply, reapply or ask for credit limit increase

almost all cc company does that...and why post on the old thread