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22/08/2012
4% Interest Hike Described As 'Mercenary'
A leading consumer advocacy group has described a 4% increase in the rate of interest by one of the State’s largest credit card companies as “mercenary”.
MBNA is writing to more than 200,000 customers this week telling them the interest rates on their credit cards are increasing from 14.9 per cent to 18.9 per cent from November.
MBNA has said, “changes in the economic and external climate means that all lenders – ourselves included – consistently re-examine their rates, pricing and fee structures”.
It said it was also taking into account “the actual or anticipated risk levels of customers” based on how they have been managing their accounts.
Chief executive of the Consumer Association of Ireland, Dermott Jewell, described it as “an extraordinary increase”.
He said he was surprised the firm is not afraid of losing a huge amount of customers as a result.
“I have to say that I think this is a very mercenary approach. Clearly they have thought long and hard about it and they are hardly likely to do a U-turn.”
MBNA however added that customers with outstanding debts could, if they wished, contact the bank and reject the rate increase. While that would mean they would no longer be able to use the card, they would be allowed to clear the existing debt at the lower rate of interest.
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MBNA is writing to more than 200,000 customers this week telling them the interest rates on their credit cards are increasing from 14.9 per cent to 18.9 per cent from November.
MBNA has said, “changes in the economic and external climate means that all lenders – ourselves included – consistently re-examine their rates, pricing and fee structures”.
It said it was also taking into account “the actual or anticipated risk levels of customers” based on how they have been managing their accounts.
Chief executive of the Consumer Association of Ireland, Dermott Jewell, described it as “an extraordinary increase”.
He said he was surprised the firm is not afraid of losing a huge amount of customers as a result.
“I have to say that I think this is a very mercenary approach. Clearly they have thought long and hard about it and they are hardly likely to do a U-turn.”
MBNA however added that customers with outstanding debts could, if they wished, contact the bank and reject the rate increase. While that would mean they would no longer be able to use the card, they would be allowed to clear the existing debt at the lower rate of interest.
(H)
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