Virgin Money customers rounded up the bank after it suspended their credit cards, despite many of them not struggling with their refunds and clearing their balances completely.
Borrowers recently shared emails from Britain’s sixth-largest bank stating that ‘further spending on their card’ has been halted after ‘reviewing their overall financial position’ and their Experian credit report.
About 32,000 customers, about 1.6 percent of its customers, have their credit cards blocked, according to The Telegraph.
Virgin Money customers received emails saying their credit cards had been suspended
Still, two long-standing bank customers complained to This is Money that they had either paid off their balance in full each month or paid significantly more than the minimum payment each month.
One even said that her finances were in the best position she had been in the two years she had been a cardholder.
In response, the bank told us that it regularly reviewed the accounts, that it was a small number of affected cardholders and that all those involved could request that their account be opened again.
The City Regulator of the Financial Conduct Authority told This is Money, it discussed the situation with Virgin Money “to understand how they support the affected customers.”
An expert said that Virgin’s decision seemed to “go against everything the FCA is trying to do to help consumers in these challenging times.”
Some borrowers speculated that the accounts had been frozen because the bank was concerned that people could not repay their debts during the coronavirus pandemic, and announced on Thursday it set aside an additional £ 164 million for virus-related defaults.
But despite receiving an email from the bank saying it had blocked spending on their credit card “to make sure you borrow a sustainable amount,” some of those affected had flawless records.
Dr. Rachael Bond, an academic at the University of Sussex, had signed a 20-month interest-free deal with Virgin Money about three years ago after she got into debt to fund her doctorate and cover the healthcare costs for the 90-year-old mother, who has dementia has.
But despite getting the card when she was “ going through a rough patch, ” she told This is Money that she never missed a payment or exceeded her credit limit and always paid at least twice the minimum payment amount per month.
Dr. Rachael Bond, a research fellow at the University of Sussex, had her Virgin Money credit card canceled a few days after she finished paying
Ironically, she received the email from Virgin Money just a few days after she paid the last £ 450 off her card and actually had £ 6 in credit. She said, “The really stupid thing is that my financial position, and probably my credit, is much better now than when I got the card.”
She added, “I can only assume that they are suspending accounts without notice where they can to limit their exposure to the inevitable economic collapse after the corona virus.”
An example of the emails sent to Virgin Money customers. It told them that the bank had looked at their overall financial position, despite one of the recipients being in a better financial condition than at any time they had previously had the card
Meanwhile, Carl Hunter, a foster carer from Manchester, had suspended his Virgin Atlantic Reward card despite never missing a payment and always emptying his balance in the nearly two years he had the card.
He said, “I am a foster carer and we have children at the last minute, and I use my credit card to buy things like beds and cots; and spend everything on my credit card to protect me from online shopping and fraud.
The really stupid thing is that my financial position, and presumably credit, is much better now than when I got the card.
Virgin Money customer Dr. Rachael Bond
“I always clear the balance completely, but some months I paid the balance of the bill a lot because my balance changes daily, because I use it for everything.”
The email he received on Tuesday also said, “ Please keep making your minimum payment every month. Failure to do so may result in your account becoming overdue.
“You don’t have to change the way you pay right now, you can see how you can pay in different ways on the back of your statement.”
Several other long-standing bank customers have complained about what happened to them on the social media platform Twitter.
One of them said, “I’ve been a customer for almost five years and just received an email saying my card was suspended after a review. I never missed a payment and I pay much more than the minimum payment. ‘
Another tweeted: “If suspending a long-term account with a good credit history with all the on-time payments doubles the minimum, at least since 2016 your idea is customer service, then I choose not to be a customer anymore.”
Virgin Money, the sixth largest bank in the UK, said 40,000 of its credit and personal loan borrowers were on a three-month payment holiday
The bank today revealed that about 2 percent of its more than 2 million credit card customers and 6 percent of its borrowers had a three-month payment term, with approximately 40,000 unsecured borrowers terminating their payments in total.
It also revealed that about 12,000 of its credit card customers were three months behind on their payments before the pandemic hit.
The regulator, the Financial Conduct Authority, has told banks not to cancel the credit cards of customers with persistent debt who paid more interest and fees than paid their balance over an 18-month period until at least October.
Andrew Hagger, founder of personal finance site Moneycomms, said he thought the Financial Conduct Authority would investigate the situation with Virgin Money
It has also required banks to offer struggling borrowers a three-month payment term, but it doesn’t seem to have issued guidelines on banks canceling creditworthy borrower cards.
An FCA spokesperson said, “Credit card providers routinely manage risk and affordability. However, we have been clear that we expect companies to provide strong support and service to customers, especially during the current pandemic, taking into account the individual circumstances of the customer.
“We’re going to discuss this with Virgin to understand how they support affected customers.”
Andrew Hagger, founder of personal finance site Moneycomms, said, ‘The timing couldn’t be worse – I’m sure the regulator will take a closer look at this situation as it appears to be in violation of everything the FCA is trying to do help consumers in these challenging times.
“This card freeze will hurt Virgin Money cardholders at a critical time when they need some financial breathing room and tolerance.”
A Virgin Money spokesperson said, “As a responsible lender, we need to review accounts regularly, in line with other credit card providers.
“If there are any changes to a customer’s account, we will notify them in advance, and customers may request to reopen accounts if necessary, which will be assessed on a case-by-case basis and followed up promptly as required.
“We encourage anyone with concerns to get in touch so we can help them as soon as possible.”
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