Posted on 02/21/2007 7:06:31 PM PST by FLOutdoorsman
MBNA has started fining customers who have positive balances on their credit card accounts. Robert Watts reports
Swingeing rates of interest. Annual fees. Hidden charges. For years credit card companies have charged their customers for borrowing money. Now one card provider has started punishing its cardholders for being in credit.
MBNA, the American credit card giant, has written to thousands of people in the past few weeks who have inadvertently paid the company too much money.
Carolynn Shaw, a mother from Sydenham in south London, received her letter last week. MBNA's missive tells her that unless she clears the positive balance on her card by the end of next month she will be charged £10 or – if less than £10 – the total amount by which her card account is in credit.
"When I first read it I just felt it was a bloody cheek. It's my money," she says.
Ander Hagger of Moneyfacts, the service that allows consumers to compare financial products, says: "This is the only instance of a fine for being in credit we've seen.
"MBNA says it's doing this to protect people's money for them but I don't know if that excuse holds water – fining people is hardly a good way to protect customers' money, is it? I'd say there is a real danger that people would be so offended they might take their account elsewhere."
Finding yourself with a positive balance on your credit card is not as hard as it may seem. It can occur when a cardholder has overpaid their balance, perhaps if they had set up a monthly standing order.
Carolynn isn't sure how she ended up in credit: she hadn't used her MBNA card for about two years. "I'd destroyed the card and thought the account was closed," she says. "It was only by chance I actually got the letter. MBNA's letter was sent to our old address and the forward we had put on our mail from there is about to expire."
MBNA insists that its new policy is not intended as a revenue-raising measure. A spokesman claims it is in fact a "tidying up exercise". "We want people to get their money back. As well as not earning any interest, positive balances do not have protection from fraud. This is not about fining people just for the sake of it," he says.
The fines are not a one-off penalty. MBNA describes the fee as a new "annual service charge" for accounts that have been in credit for more than 12 months.
Unsurprisingly perhaps, MBNA isn't prepared to say how much the new fines will earn the company. Instead it claims that only a minority of the "thousands" of customers it has written to – again, the company refuses to say how many customers are involved – will receive the £10 charge.
Most will apparently take one of the three options MBNA lists in its letter: transfer the balance to a current account, spend the credit on the card or give the money to MBNA's "nominated charity", Cancer Research UK (MBNA says it has given £500,000 to this charity in recent years).
Barclaycard, Britain's largest credit card company, says it does not charge cardholders for being in credit and has no plans to do so.
Another provider, Virgin Money, suggests that the recent crackdown by the Office of Fair Trading on credit card charges would only force providers to conjure up new ways to make money out of their customers.
Carolynn says she is certain she will not be applying for another MBNA card in the future. She has also yet to decide how she wants to spend the outstanding balance on her MBNA account – assuming that she can act before the company claws back the balance.
"Actually there was only £1.05 on the card – which might just allow me to splash out on a cup of tea."
ping
FYI, Bank of America bought MBNA.
Good to know. If they don't want my money I'm sure someone else will.
If this were attempted in the US, a swarm of hungry class-action lawyers would fighting each other to head the huge class action lawsuit Thousands of victims, a few dollars each, indefensible behaviour by the Defendant. This would be a class-action lawyer's dreeam.
That is better than finding money in the dryer :)
HA....one year I failed to send in our Income Taxes....the IRS owed us money.....when we discovered it....my accountant called me brilliant....seems the IRS was paying a pretty good interest rate that year, so we made money!
Money cannot buy this kind of bad publicity.
Ain't that just swell! So BOA is gonna 'fine' good credit risks and give the money to bad credit risks ... illegals. So this way they're covered without having to risk a dime.
I knew there was a clever angle in all of this from BOA :)
I was wondering how many people knew that?
Something that irks me is being charged a "convenience charge" when paying a bill on the phone or on line.
Another is being charged an installment charge because an insurance payment is automatically debited from my bank account.
The other night I was charged $14.95 to pay a credit card payment by phone. Had to pay by electronic check. Couldn't use a debit card that came from the same account. Had I been late the charge was 39.00 so I ate the 15 bucks for stupidly forgetting to pay the monthly bill. Good thing about it was......I paid the credit card off!
Paying additional charges to pay bills is pure greed.
And look at the propaganda it makes with the 'American Credit Card' quote.
Three years ago RBS's association with US Ski Team ended, and so I 'cashed in' all my remaining points for some neat stuff: A set of USST beer mugs, a t-shirt or two, and a fuzzy vest. Haven't used the credit card since ... zero balance for three years now.
The other day I get a letter from RBS: "We regret to inform you that after carefully reviewing the status of your account we are unable to reissue a new card" ... oh well, no loss to me. Just don't drop a bomb on my credit report about it, OK? /grin
No don't tell me let me guess. Chase Bank likely a store card doing business with them perhaps? I dumped them last year when they tried that stunt. One used to be top named electronics store lost a long time customer as well for turning their credit business over to CHASE. They didn't get the $14.95 after I pushed it with them as it was a new hidden policy and I closed the account.
I read 'Steal This Book' by the Yippie Abbie Hoffman a long time ago. It was a manual on how to rip off everybody so you don't have to work. I was adventurous enough to try some of that stuff for fun and it did work!! (I am far different than when I was a bored fat squirt with long hair back then).
I won't participate in this prank. I have too much at stake. Idiots will. Just watch for a while.
I have often paid in advance on my credit card if I was going on vacation and might need cash while there.No is no interest charge if you have a credit balance and you take cash from an ATM. Many times I have sent $2000 in advance to the credit card company. When I return and get my statement I ask for a refund. That way I do not pay their charges or interest on cash advances.
I would drop any comapny that would charge me for credit balances.
American Express made a fortune out of telling people to hide AX checks in their sock drawer for years.
Does anyone realize how easy it is to rip-off BofA now? I only owe a few hundred $ on a 13K Visa. All you need is a fake Mexican ID, a fake check stub from a fake company, a cheap car and a lousy haircut. A dark tan and enough Spanish to sell a story. A computer can generate fake documents.
I promise you that people are gearing up for this fraud that I won't be paying for. Watch BofA's stock price. That's the best indicator.
A class action law suit seems justified in this case.
I wish I was far enough ahead to do that. But then again I don't take vacations anymore. I just use a card where I want some leverage protection on a high dollar {by my standards} purchase like a computer. The store that lost my business I had done about $4K with over the years. The next time I need a new one I'll get a better card deal elsewhere anyway and I won't go to Circuit City.
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