If you have a credit card with MBNA or a Virgin Credit Card which is through MBNA bank, you will have received a letter relating to the interest rates they currently charge.  Before I became so heavily involved in the debt industry, this would have gone straight in my shredding pile. For this reason, I deemed it a good idea to blog and tell you all what this means to the average person using one of these credit cards.

Let’s look at MBNA’s own card first:-

For purchases made on your card in shops, online, hotels, restaurants, car garages, etc. Your interest rate payable was previously 18.9% and will increase to 25.9%. This means that you will pay an additional 48pence for every £100 you owe each month.

So if you owe £100 balance MBNA will charge you £5.76 in a year additional interest to the amount you would be paying anyway.

If you owe £1000 that’s an extra £57.60 to the interest you are currently paying.

If you owe £10,000 they will charge you a whopping £576 extra annual interest. If this is charged over the year, your payments would increase by approximately £48 per month. MBNA increased their minimum payments in the summer, this would be in addition to that.  I saw customers after that increase, feeling the pressure of additional payments.  This is a further request for more money from your monthly budget, in addition to petrol price increases, food increases, energy prices increases. 

All MBNA Balance transfers will be charged at 29.9% so in simple terms, anything you buy could potentially cost an additional £30 per £100 spent. This relates to both MBNA and Virgin Credit Cards. I will stress though that if you are on a balance transfer ‘deal’ made previously, this will be honoured until the arranged time comes to an end.

If you are a Virgin Credit Card customer, all transactions will be charged at 29.9%   Historically it has always been more expensive to go and draw cash from a credit card at am ATM.  To put this ino perspective – it will now cost the same as drawing from a cash machine, if you do a balance transfer, use a credit card cheque, spend money or make purchases in a shop or online.

So, what can you do about i?

Well, there are a number of options, you can:-

Pay your balance in full!  Wouldn’t everyone love to do that. David Cameron changed his speech just over a week ago, due to a potential uproar when he had planned to ‘advise’ (and I use the term loosely) everyone to pay off their credit card balances. In an ideal world this would be the easy answer, but this isn’t currently an ideal world.

You can reject the changes. Contact MBNA Europe bank Ltd. You can contact them on 0800 169 3169. However, please read further!

If you reject the changes, your account will be effectively closed – you will no longer be able to spend on the card. You WILL have to repay the credit card on the current rates and are contractualy obliged to pay the minimum payment or more each month. You must comply with the terms and conditions of the account until the full amount is repaid. Please note if you are only making minimum payments this could take in excess of 25 years.

If you feel that this further squeeze will impact on you please do contact us.  We’ve been advising on debt consolidation and debt solutions for quite some time and whatever your situation, we will have seen worse.  We’ve all been encouraged to spend and borrow, so few are in a situation where they are not affected by this financial crisis/recession/crunch/squeeze, whatever we would like to call it.

Here is a link to a You Tube video that Naomi did for us http://www.youtube.com/watch?v=dj1vIrD4rbU I saw Naomi in December 2009 right before Christmas when things were taking their toll.  It’s a bit shaky but we do finance.  (Sadly, I’m no expert at filming)

For help or assistance, give us a call on 0330 999 1976 or email smile@financialbliss.co.uk

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• 334 people every day of the year will be declared insolvent or bankrupt. This is equivalent to 1 person every 59 seconds during a working day.
• 1,391 County County Court Judgements (CCJs) were issued every day during Q2 2011 and the average judgement amount was £3,345.
• Citizen Advice Bureau dealt with 9,072 new debt problems every working day in England and Wales during the year ending March 2011.
• The average cost of raising a child from birth to the age of 21 is £27.50 a day.
• 99 properties were repossessed every day during Q2 2011.
• 112 new people became unemployed for more than 12 months every dayduring the 12 months to end June 2011.
• 1,688 people reported they had become redundant every day during 3 months to end June 2011
• £248,500,000 is the amount that the Government Public Sector Net Debt (PSDN), including financial interventions, will grow today (equivalent to £2,876 per second).
• £144,600,000 is the interest the Government has to pay each day on the UKs net debt of £2266.3bn (which includes financial interventions). This is estimated to rise to £182m a day in 2015-16.
• 197 mortgage possession claims will be issued and 154 mortgage possession orders will be made today.
• 383 landlord possession claims will be issued and 258 landlord possession orders will be made today.
• The UK population is projected to grow by 1,205 people a day over the next decade.
• 24.1m plastic card purchase transactions will be made today with a total value of £1.182bn.
• 7.3m cash withdrawals will be made today with a total value of £478m.
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