Recently we become aware of a Catalogue company writing to customers informing them that due to an increase in risk the customer was going to see their Interest rate increased by around 10%.
JD Williams told the customer it had two choices, Accept this rate hike or pay the full balance owed.
Currently, this customer has a balance of £1500 with a credit limit of £3000.
Credit Card companies who hike interest rates offer the option to continue at the current interest rate with a view to closing the account once the balance is £0, however it appears that JD Williams aren't offering this.
Credit 4 Everyone have seen a letter telling the customer that they have to accept this rate hike within 28 days as it's buried in their terms and conditions.
If the customer has increased their risk of borrowing, why have JD Williams not reduced the credit limit ? It seems very strange that a Customer with an increased risk will still be allowed to spend money with them.
It's no wonder the FCA are looking at Catalogue companies with this kind of behaviour.
If you do receive such a letter, talk to your bank and see if they can help you with a small loan or credit card, or take financial advice, I am sure you could challenge a rate hike with a Catalogue company who threaten you must accept a rate hike or pay the balance in full.
It goes totally against the responsible lending criteria.