Following the suggestion that on-line government petitions might be used as a means of direct action and could result in the most popular petitions ending up as private members' bills, I was somewhat surprised to find there are currently NO petitions open on the new goverment site. I am assuming the site is open and ready for business? I think we should hit the most obvious and least controversial issues hardest. (I realise there is no such thing as a non-controversial issue - I was just jesting!). However, although I have never fallen foul of them, my blood boils everytime I see a tv advert for payday loans showing an APR of over 2000%. I can see NO possible justification for such punitive interest rates no matter how 'useful' the suppliers might argue such loans are. The heart-rending stories in the news and on the CAG threads highlight the dangers of rolling such loans over and the aggressive marketing tactics of the suppliers are worrying to say the least. I would like to propose that CAG puts it's weight behind a petition to introduce usury limits setting the maximum level of interest for both loans and credit cards such as can be found in other countries (e.g. Australia, Canada) and in many states across the US. I'm not sure of the wording but I think there would be support. Comments please

I'm glad to see people are still challenging the Credit Card companies right to arbitrarily change interest rates without real explanation. It really is a scandal. I changed tack, however, on my own credit card disputes with some degree of success. If a Credit Card company admits that the higher interest rate they are charging are as a result of a poor payment record AND they are still charging the £12 penalty fees then they have a problem. Although the OFT in their review of charges stated they would not take any action in cases where complaints were against charges of £12 or less thay also stated in their guidelines (April 2006): “3.17 In considering costs arising from default, a credit card company should also be careful to avoid double recovery. In particular, it would need to take into account the fact that it may derive certain benefits from the actual or anticipated default of a consumer. “3.18 These benefits may also include those arising out of operating a risk-based pricing policy, that is, offering a higher APR (or a separate product with a higher interest rate) to a particular class of consumers based on an evaluation of their poorer credit risk. Moreover, consumers who default are generally required to pay the full amount of interest due on the outstanding balance. A credit card company should ensure that there is no duplication between such benefits and the money recovered by way of a default charge. “ Of course, most, if not all, CC companies operate a "risk-based" pricing policy - so they shouldn't be charging the £12 as well!! The argument is very simple. If I owe £5000 on a card and they increase the interest rate say by 12% APR (to make the maths easy) they are charging an extra 1% per month (£50) in anticipation of me possibly defaulting. If I pay late and they charge £12 then they are, in fact charging £62 plus the interest on the extra £12.... In this case the OFT guidelines have been breasched and action can be taken. Worked for me!!

Thanks Bankfodder for your comments - I agree with what you say.... Re the restitutionary damages, I, personally, would be happy with ALL the money back, interest at the rate the bank was charging me on the overdraft since they took the money, plus simple interest at 8% - which is pretty much the formula now being used for repayments of PPI... I know other CAGer's may well disagree and the argument that the damages should be much higher are certainly compelling... My point was though that I believe this issue needs more publicity. As you say the "establishment" route for re-claimimg will probably be promoted heavily.... and further legal options not so. However, more publicity re the huge injustice that has been done might influence the government - and hence the OFT and FSA?? This blog site has certainly helped me enormously over the years and I think CAG has done a great job - I would not have been aware of the extent of the banks' abuse without it.

Look I hate to be a voice of caution here - but, frankly, I never thought there would be any other legal outcome in this case. It has taken two years in the Courts for the banks to admit what we all knew - charging £35 for going over your overdraft or £25 for bouncing a cheque in no way reflects the costs to the bank of dealing with it and therefore the charges are unfair under the Unfair Terms and Conditions Regulations. But, as I understand it they have gone even furher - they have admitted that the money they were taking from the disavantaged customers was being used to fund free banking for richer customers. At a dinner party about 12 months ago I had to bite my place mat when some p****k was explainaing that those people who had got into debt had cost the banks so much that they were the ones responsible for the credit crunch and how terrible it was that the irresponsibility of such people was now going to mean he had to pay for his banking. I had to bite my mat hard because otherwise I would certainly have ripped some vital parts from the guy and inserted them somewhere painful whilst I explained that actually, the banks had been illegally robbing abandoned single parents, divorcees, people who had lost their jobs, people with illnesses that meant they could't work, plus a whole range of other disadvantaged people to pay for him to have the privilege of free banking... My problem is that these people will not give up their privileges easily. OK it looks like we finally won the legal argument - but now the Law Lords have to stick to the legal - not the empassioned bull**** - arguments the banks are now resorting to. Actually, I have faith in the British Legal System and think they will!! What I'm less certain of is what the Office of Fair Trading and FSA will do. Are they immune from the political pressures which there will inevitably be?? If it is judged that the banks took the money unlawfully - then it should be paid back in full - plus the exorbitant interest they charged on the money they stole as well. I, like many of the contributors here, have NO sympathy with the banks because they mugged me and abused me over and over again and I am angry - very angry. To the media - this subject has gone off the boil whilst they have been pursuing other abuses of privilege... I would like this gevernment to know that there are a lot of people, like me, who are angry and we want justice.... That's all we've ever wanted... Shouldn't we be organising a petition or lobbying MP's or writing articles to the press - before there is the chance of the OFT backing down and proposing some compromise (assuming the Law Lords do theri job)...

Welcome Hoveboy to the thread and to CAG... I know, from experience, you will find a great deal of help and advice in this forum - good luck with all your endeavours....

Hi Devilsadvocate Sounds as though my lengthy diatribe may not be much use to you. I have a similar argument going on with a Halifax CC. They also said "if you make regular payments on time over 6 months we might review the interest rate" (currently 29.6%). Like you, I wouldn't trust them. I agree with Poppynurse. Hit them with an SAR. Say you want all information on file about your account including notes.... Might get lucky! Cheers

Sorry. Rant over.... OK. The question is whether the increases in your interest rate are, indeed, as a result of your credit rating or payment history. If so, it is an example of a practice referred to as "risk-based pricing". There is a lot of debate about the legality/ethics etc of this practice but that's what CC companies do now... I can't help with advice on how to get the CC company to justify their rates but I can point out one small consequence of adopting risk-based pricing which may - or may not help. When the Office of Fair Trading investigated default charges on credit card contracts in 2006 they found: “On the analysis we have undertaken we have concluded that generally credit card default fees have been set at a significantly higher level than is fair for the purposes of the UTCCRs.”. UTCCR's being a reference to the Unfair Terms and Conditions legislation. They went on to suggest that a level of default charge of £12 might be reasonable. However, the section also said “The level of a fair fee will, however, be dependant on the precise business circumstances.” the statementmakes it clear “the card issuer may only recover the relevant limited administrative costs arising out of those defaults.” A further section of the same OFT guidelines state “3.17 In considering costs arising from default, a credit card company should also be careful to avoid double recovery. In particular, it would need to take into account the fact that it may derive certain benefits from the actual or anticipated default of a consumer. ………” “3.18 These benefits may also include those arising out of operating a risk-based pricing policy, that is, offering a higher APR (or a separate product with a higher interest rate) to a particular class of consumers based on an evaluation of their poorer credit risk. Moreover, consumers who default are generally required to pay the full amount of interest due on the outstanding balance. A credit card company should ensure that there is no duplication between such benefits and the money recovered by way of a default charge. “ This means that if you pay a higher interest rate because of your credit rating, or because of your payment history, the company should not also charge you £12 late payment fees. Consider a balance of £5,000. If your interest rate is 6% higher than normal because you are a bad risk, you pay roughly an extra 0.5% per month i.e. £25. If you then pay late and they charge you £12, you have actually paid a penalty of £37.... My thought was - if MBNA has been piling on the defalt charges - AND they have upped your interets rate because of your credit rating or late payments you can claim the charges have been unlawfully applied and claim back - the charges (including the extra interest) plus 8% simple interest on these charges from the date they were incurred (because they unlawfully deprived you of the money) Some experiences suggest that if you hit the CC with this argument they sit up and take notice because they don't necessarily want this little known OFT clause to become wider public knowledge. If this is not relevant to your circumstances - sorry. I guess I might post this on otehr threads relating to default charges rather than interest rates. Regards Marlowe

Hi Devil's Advocate You may have seen the bloke from moneybox on BBC breakfast TV earlier this week talking about credit card interest rate increases (in this case Capital One). His basic take was - well the Credit Card companies are so cautious now, they are looking at their customer's credit ratings and adjusting their interest rates to protect themselves from possible defaults. He mentioned rates of over 30% and didn't seem perturbed at all... In my view he should have been outraged... The reality is, people with poor credit ratings are not able, either to pay off their balances nor switch cards. They are just sitting targets. Increasing their interest rates will not discourage them from getting into debt - they are already in it. All it does it make it far, far harder for them to get out of debt and increase the chances they will default. Many years ago this was referred to as "loan sharking" - taking advantage of people in financial difficulties by offering loans at exorbitant interest rates and then increasing the penalties when they couldn't pay, eventually repossing whatever they owned. The Consumer Credit Act and other legislation was supposed to stop these practices. Well the news is that loan sharking is alive and well in Britain. the difference is that it is now being practised, not by unscrupulous opportunists, but by the mainstream financial institutions whose greed and paucity of ethics have led to the most staggering financial crisis in history. Sorry - I got my soap box out there. Not much practical help to you - I aplogise!! I have got some information, however, which may be of help - I will follow this posting up immediately with another one once I have had a lie own in a darkened room... Marlowe

Hi Militantconsumer, Certainly an interesting thread!! I, like most, had assumed that what Egg said about the terms of the agreement remaining in place until the balance was settled - even though the agreement had been terminated - was true. If it turns out not to be true (and there are certainly some cogent arguments on the thread), then Egg would appear to have made a huge blunder. With regard to my own situation, I can only say that I no longer have any dispute with Egg nor (regretably) am I at liberty to discuss any matter relating to my Egg credit card with anyone other than the Courts and the Government. I have to say, I actually feel like a bit of a traitor - but I'm sure most people who use CAG will understand that sometimes one doesn't have a lot of choice. However, the help and moral support I have received from this Group has genuinely inspired and moved me. I will certainly do everything I can to help others in this Group in any way I can..... Oh!! and, of course, there's the small matter of my wife's Egg card - also one of the 160,000 agreements terminated last year.... with (let me see?) quite a substantial balance owing. OH YES, EGG, I'M BACK!!!

I think a multipronged attack is the way forward. I have already written again to Egg requesting repayment of ALL late payment charges pointing out that the interest rate increases they applied were effectively additional default charges and that their defence of the £16 charge looks a bit shaky. Once I get their reply I intend to raise a compliant to the FOS about the interets rate rises (I'm assuming that, as with other compliants to FOS, you have to show you have tried to resolve it with the company first?). In the meantime I will write to the OFT asking them what the outcome was of any investigation they did when Egg cancelld the cards and suggesting they have a obligation to investigate the 5% interest rate increases under their powers covered by Section 8 of the Enterprise Act 2002... Worth a try! PS Merry Christmas and thanks to everyone on this forum. Throughout 2008, it has been a great source of inspiration, good advice and a huge reassurance that I am not alone and that a lot of people do actually care!

Hi Militantconsumer Many thanks for your posting and offer of help. You raise a very good point about interest rates for continuing customers. However, I suspect at 10.9% APR you would probably have noticed a suddden increase of an extra 5% and at least been a bit worried about it even if, as you say, you pay the balance in full every month. The limited evidence I have so far seems pretty consistent. ALL Egg customers that have contacted me had a 5% rate increase in December 2007 prior to a letter cancelling their cards in January - including myself. I suspect all of us were in the "sub-prime" part of the Egg customer portfolio. i.e. we had all made late payments at some stage and our credit ratings are poor. (I don't know this - so apologies for anyone contacting me where this is not true!). I would be very interested to hear from any Egg customers who had their card cancelled and did not fall into this category. There was a strong suggestion, at the time, that Egg were clearing out unprofitable cards as well as "risky" accounts. There is nothing intrinsically wrong (legally, at least - morally, perhaps!) with Egg operating a "risk-based pricing policy". Most card companies do so i.e. the less money you have and the greater your need for credit - the higher the charge for that credit will be. However, there is an interesting debate to be had (probably in Court) as to whether the actions of card companies operating such a policy have been "fair" under the Unfair Terms and Conditions Regulations (UTCCR's). If you are a high risk card customer, you are penalised in two ways - firstly by penalty charges for late payment, overlimit balances or returned (bounced) payments. These penalties are allowed because, basically, you breached the contract. The charges, however, MUST be proportionate to the actual costs incurred by the card company resulting from the breach. This, of course, is the argument currently going on in Court over bank charges. With credit cards, the Office of Fair Trading (OFT) investigated the charges back in 2006. Their conclusion was that “On the analysis we have undertaken we have concluded that generally credit card default fees have been set at a significantly higher level than is fair for the purposes of the UTCCRs.”. The OFT went further to suggest that a charge of £12 might be a "guideline" figure for such charges above which there may be a case for complaint. Most companies have, therefore, redued their charges to this level (except Egg who reduced its charges from £20 to £16!). However, the second way high risk customers are penalised is through increased interest rates ("risk-based pricing"). i.e. if you default - or there is a risk you might default, the card company can cover its costs by increasing the interest rate on your account. But here comes the rub! The OFT is very clear in its guidelines and cautions card companies against "double recovery". In section 3.18 of the 2006 guidelinesit points to benefits "arising out of operating a risk-based pricing policy". It goes on to say that "A credit card company should ensure that there is no duplication between such benefits and the money recovered by way of a default charge." i.e. in assessig the "fairness" of default charges the OFT believes the Courts should take into account other measures - such a rate increases for high risk customers. The question is really whether Egg acted "fairly" in applying a 5% rate increase to customers - knowing they were about to cancel their cards. I suspect Court action to prove the case one way or another would be very long and difficult. Hence a referral back to the OFT to investigate might be the only option here for collective action. Regards PS - Still would like to hear from other Egg customers!

Thanks bathgatebuyer! This certainly seems to be the pattern.... Any more CAGer's who can help with further examples??

Hi Kat1979 ...and many thanks for sharing your case on this thread. I understand and empatise with your position entirely. Whilst I may have mearly cleared my Egg balance, I have several other debts that will take considerably longer to sort out. Regarding the late payment penalties and Egg, I wrote and asked for these to be refunded. So far they have offered to pay the differnece between the £20 they were charging and the £16 they now charge - but no interest. I have declined their offer! I agree entirely with Mistermind - stick at it. There are many other threads here that I have found really helpful. As Mistermind says, however, on the issue of interest rates "there is no past form". Mistermind is also correct in pointing out the recent government statements on this issue raise some hope and certainly, applying to the FOS (althouth this is not quick!) sounds a very good idea. I'm still interested, however, in seeing how big this issue is. Here's the possible scenario. A credit card company has built up a portfolio of unprofitable (because the the holders don't use the card) and risky (because the holders are overextended) accounts. They decide to clear out this part of their portfolio - Fine, that's their call. Some would even applaud their action saying this is prudent and responsible partfolio management. The trouble is - this portfolio isn't worth much - the unprofitable part is unprofitable and the sub-prime part (you and me!) may not be able to pay the balance off - we might even default. So what they might decide to do is increase the interest rate on the whole portfolio - say to a healthy 26.9% APR. There's no risk to them doing this. If the account holders don't like it, what can they do? Cancel the account - that was the whole point of the exercise. The unprofitable bit will just pay off in ful. They would know, however, the sub-prime bit won't be able to pay the debt off - so the increased interest rate is a nice way of revaluing the portfolio. However, this pratice may be considered unfair under the Unfair Terms and Conditions legislation. It may be OK to reassess an individual's crfedit risk and argue the case that an increased interest rate is appropriate (I'm sure there will be much more to come on this argument!) - But a collective interest rate hike seems more difficult to justify - particularly if you are withdrawing the services offered! The OFT are not set up to look at individual cases - that's the job of the Financial Ombudsman Service (FOS) - but the OFT (under a section of the legislation referred to as Section 8) can take action if the organisation concerned has acted in a way which affects the interets of a large number of consumers. If it could be show a credit card company acted in the way I have described then there would be a string case for teh OFT to act. Sorry for the length of this posting - but I wanted to explain why I'm still interested in hearing from other Egg customers - not that I'm saying this is what Egg did of course - that would be libelous! Good luck, by the way... happy to help if I can

Thanks Martin I've subscribed to a couple of other threads - the MBNA great interest rate swindle was an interesting discussion and very informative. With Egg, the OFT promised an investigation - I will contact them and see where they got to. Regards

I realise the cancellation of 161,000 Egg cards last year is old news, but I guess many, like myself, still have not paid off the outstanding balance yet. I am almost there, but have been complaining to Egg about the very high interest rate they have been charging on the balance. This led me to look at the history of interest rates on the account and I found that they raised the interest rate significantly 1 month before cancelling the card. Coincidence?? Well, I spoke to a couple of other ex-card holders. Guess what?? I would be very interested in hearing from any CAG members who also had an Egg card cancelled - and whether there was an interest rate increase shortly before the card was cancelled. If there is enough evidence that a policy of increasing the rates on cards they were about to cancel was in place, there may be a case for taking this matter to the OFT. The OFT don't deal with individual claims - but can act if an organisation has operated in a way that might unfairly affect a large number of consumers. There was talk at the time of an OFT investigation - but I never heard anymore on the subject. Many thanks

Well done Beachlover - it's a good feeling when you finally get something back.... Don't forget to ask them if they have considered refunding any interest charged on the premiums you paid in addition to the 8% interest - which is solely for depriving you of the money in the first place.. This is what the FOS would appear to be suggesting as part of the settlement.

Have also submitted a request to investigate to Watchdog - let's see if we can get more support...

Hi Marj Sounds a good idea to me - it's certainly worth a shot. They have a web-site that you can submit issues - I have done this before - but didn't get a response... I suggest that if several people start to raise the same issue via their web-site we might have a better chance... Cheers

Hi BosBoy Many thanks for the information - this explains the rules Experian apply that allows FD to trash my credit report - Basically, if you go over your limit - or bounce a payment they can give you a black mark - well an orange mark anyway! if you do it twice in a row - they can give you a "2" and if you do it four times in a row it goes red and looks really bad on your report... even though you may have covered the bounced payments on representation and returned your account below the limit by the end of the month - WOW! - Brutal...:-| I'm still going to ask why they started doing it after I had complained to them.... Would still like to hear from any FD customer where they don't do this to you - it would help my case.. Many thanks

Exactly, that was my understanding as well... I don't know where to go from here - but it's certainly given me a lot to work on with regard to a number of cards I have... Thanks again....

Hi BelovedM8 You were kind enough to reply to my post on another thread - for which many thanks! I have taken your reading advice and that led me here to this thread.... which I have also been reading with interest. I had no idea the problem was so widespread... It really is a bit of a scandal!! Has anybody suggested approaching the OFT to take action? (I haven't been through the whole thread yet - so forgive me if this is old ground) I know the OFT don't deal with individual cases but it might be possible to persuade the OFT to act under under Part 8 of the Enterprise Act 2002 which is there to deal with "infringements which harm the collective interests of consumers" I also know the OFT guidelines on the application of Part 8 and Unfair Conditions point out that they don't normally consider clauses relating to rates under unfair conditions ... unless, that is, the rates might be considered to "in the particular circumstances, be oppressive or exploitive of the individual borrower" Their guidelines add.... "even if they are in line with rates prevailing at the time in the particular sector". I don't think rates of around 30% APR would even need to call on this latter point! Of course a lot of customers would need to band together to raise a collective complaint to the OFT for any chance of action - and that would be unlikely to happen.... Unless, of course, they were members of some kind of action forum or group....

OK I've been reading and thinking about this - particularly Egg. In my case they canceled the card in January - coincidentally, they increased the interest rate on the card in December - quite substantially. So this is a possible scenario... A credit card company decide they don't like a bunch of customer accounts - they consider them to be high risk. So they decide to cancel them - fine - they're entitled.... But here's a wheeze - before they cancel them they decide to hike the interest rates... Possibly to thousands of card holders they already know they are going to cancel the agreements with... After all why not!! The customers can't do anything about it - they are the ones they know are more likely to be stretched financially and, anyway, all the customers can do is cancel the agreement - which the've already done! Hmmm.... I'm not saying that's what Egg did - after all that would be scurrilous to suggest such base motives for such a responsible financial institution.... But if a credit card company were to do such a thing, perhaps it might be possible to persuade the OFT to act under under Part 8 of the Enterprise Act 2002 which is there to deal with "infringements which harm the collective interests of consumers" Of course, the OFT guidelines on application of Part 8 and Unfair Conditions point out that they don't normally consider clauses relating to rates under unfair conditions ... unless that is the rates might be considered to "in the particular circumstances, be oppressive or exploitive of the individual borrower even if they are in line with rates prevailing at the time in the particular sector" I'm not sure if rates of, say, 26.9% APR are in line with rates prevailing in any particular sector at any particulat time... but it's food for thought. Of course the customers of such a credit card company would need to band together to raise a collective complaint to the OFT for any chance of action - and that would be unlikely to happen.... Unless they were members of some kind of action forum or group....

Thanks Ladybird for the response... I was never in any doubt they had the right to cancel - nor to change the interest rates whilst the agreement was in force - but if they have cancelled the agreement isn't it dead? It's just a debt at that stage no CCA?? What they did was hike everyone's interest rate and then immediately cancel the agreement. Must be something to go at them with - at least under the Unfair Terms and Conditions legislation??

This is an awesome thread and I must admit I feel quite apprehensive trying to join it.... So if I'm off track please tell me to naff off.... I have a question relatingto CCA's - I tried posting a new thread - and got some helpful contributions but no real answer. The original question was about the status of the agreement if the credit card company cancels the card - but the responses I got back caused me to focus on one particular situation which is Egg... As everyone knows, Egg wrote to literally thousands of customers early this year cancelling their Egg Card Agreement - yes, the letter (assuming mine was the standard letter!) actualy says "We are ending your Egg Card Agreement" it goes on to say "we are giving you formal notice that your agreement will end 35 days after the date of this letter"... That seems fairly unequivocal to me. But further down the letter says "The Egg Card agreement continues to apply until the balance is repaid in full"... Now that doesn't make sense to me... Surely, if you cancel the agreement then you can't then say the terms of the agreement still apply. Clearly, the agreement (assuming it has been properly executed - on which subject I have read this thread with interest and wonder!) means that the outstanding balance becomes a debt for which the card holder in liable... And I'm not disputing Egg's right under the agreement to cancel it.... The issue I would like some experienced guidance on is - what interest can then be added to the debt. Egg just carries on as if nothing has happened and adds interest at (in my case) 2.008% per month... What is even more upsetting is that Egg increased the interest from 1.527% per month on purchases and 1.941% per month on cash to this flat 2.008% - guess when!! Exactly one month before they cancelled the agreement. I don't actually owe that much on the card - but it seems very underhand and unfair if Egg did this to all those thousands of customers. Thanks in advance for any views - and sorry to but in if this is off thread...

Thank Anthuk - sorry about your situation - but glad to know I'm not alone. Not sure how - but if I can be of any help I'm keen. I'm certainly going to do more research on this subject - If I find anything I will obviously post it. With regard to Egg, as per my earlier posting, I don't owe them too much. My strategy was going to be to write, point out they have cancelled the agreement and ask them to stop adding interest - making an offer of, say, six equal monthly payments amounting to the outstanding balance as an offer of "full and final payment" and see if they cash the first cheque... Can but hope... I can just about manage that and it would be nice to get at least one creditor off my back... I have others though!! Is there a thread on "full and final payments" anywhere?