How to get refunds from catalogues and credit cards

Have you had a credit card, store card or catalogue where your credit limit was too high?  So high that the monthly repayments were hard to manage and you got into more debt?

For some people the limit was too high at the start. Others were originally given an OK limit, but the lender kept increasing it. or it was OK while the 0% offer lasted, then unmanageable.

You may have a good affordability complaint that the lender was irresponsible in allowing you to borrow so much.

This applies even if you made every payment on time, as you may have borrowed more elsewhere.

This article explains how to ask for a refund of the interest you have paid.

What is “affordable”?

The regulator’s rules

Even if you made every payment on time, the debt may still have been unaffordable.

The following is my summary of the regulator’s rules:

• a lender must check if credit is affordable when you apply for it. For a very low limit, not many checks are needed;
• a lender should make similar checks before increasing a credit limit;
• credit isn’t affordable if paying it leaves you short of money for your bills, normal expenses, and your other debts;
• if you have to borrow more most months, this would not be affordable;
• you must be able to repay the limit set within a reasonable period. Paying the minimum amount is OK for a while, but not for a long time.

Good reasons to complain

If the lender could see any of these on your credit record, they should probably have declined your original application:

• a level of borrowing that looks very high in relation to your income; or
• you had a different credit card with the same lender where you were only making minimum payments; or
• other credit cards where you were near your limit and persistent overdraft usage. Here is an Ombudsman decision saying Zopa should not have given quite a low initial limit in this situation; or
• recent credit record problems: defaults, missed payments, or arrangements to pay, mortgage arrears; or
• recent payday loans or a lot of recent credit applications.

Your credit limit should not have been increased unless you could afford it. In addition to the points above, any of the following should have also warned the lender you were already in difficulty:

• making minimum payments for a long while;
• often taking cash out on the card;
• making a minimum repayment but then using the card to pay for food or petrol so the balance never drops;
• using most of your limit for a long period;
• significant gambling the lender was aware of;
• recent missed payments or an arrangement to pay on your credit record;
• your overall level of debt on your credit record had increased a lot.

NB many cases are won when someone has never missed a payment.

You don’t need to know the dates and amounts of any limit increases before you start your complaint – my template asks for these.

0% balance transfers

Here the lender should check that you would be able to repay the whole limit within a manageable length of time (say 5 or 6 years) taking into account that interest will be charged when the 0% term ends.

So if you were ok during the 0% term but then you couldn’t afford the payments when interest started being added, you can complain. Ask for any interest to be refunded and to be able to repay the rest with no interest. Don’t make a complaint about a BT that is still at 0%, it’s much easier to wait until the 0% has ended. 

Do I need to know the limit and date details?

No. My template below asks for these. The lender already knows the details so it doesn’t help your complaint by listing them.

How to complain

The email address to use

The best way to complain is by email. Find the email address here:

Credit card and catalogue email addresses

Start with this template

I’ve invented this example so you can see how a complaint could read.
Change/delete the bits in italics to tell your story. Miss out any dates if you don’t know them, this isn’t a problem

Think about these points before complaining

Timing

These complaints can be made if your account :

• is still open; OR
• it is closed and settled within the last 6 years; OR
• or if it is with a debt collector and you defaulted within the last 6 years (NB the complaint goes to the original lender, not the debt collector.)

If you have had a DRO, IVA or bankruptcy after these problems, ask in the comments below, as this can be complicated.

Old accounts

The Financial Ombudsman (FOS) can only go back to April 2007, when the law changed to allow these complaints.

Many lenders reject complaints about something that was more than six years ago and say the ombudsman won’t look at them. FOS will often look at these “old” accounts if they have still been open and not defaulted within the last six years. 

If your account was opened in 2017 say, but the lender increased your limit in the last six years, then those limit increases can definitely be looked at. You can always get bank statements going back six years, even from closed bank accounts.

If there hasn’t been a limit increase in the last 6 years, then you will need to show that the older limit increases were unaffordable. If you have kept bank statement, great. Some banks you can get old bank statements from if the account is still open – you need to see what can be downloaded now in the app and contact the bank to see if older statements are available.

A alternative for old defaulted accounts?

If your account was opened a long while ago, you defaulted and still owe a balance, perhaps in a DMP, think about asking the debt collector to produce the Consumer Credit Act agreement for the account.

If the current creditor can’t produce a proper copy of the agreement, the debt cannot be enforced in court and you can simply stop paying anything to it. This applies to all credit cards, store cards and catalogues.

It may be that the balance on the account is larger than any refund you might get. In which case, if the CCA agreement cannot be produced, you would be better off asking for this rather tyhan making an affordability complaint.

Is a refund what you really need?

This depends how large your current financial problems are.

Complaining about newish debt will often only get the interest removed – you still have to repay what you borrowed. Don’t spend months arguing with lenders and going to the ombudsman if you will still be in a mess even if you win.

So phone National Debtline on 0808 808 4000, tell them you are thinking about affordability complaints but you would like to know what your other debt options are.

Poor reasons to complain

You can’t complain just because the interest rate was high or because you have paid them a fortune over the years.

You won’t win an affordability complaint if something unexpected went wrong later in your life. If you had been managing a credit card fine for years but then you lost your job or separated from your partner, this isn’t the lender’s fault. But you may still need help to get interest stopped on the cards – talk to StepChange or National Debtline for getting the interest stopped when you are in difficulty..

Don’t be put off by a rejection or a poor offer

Lenders often reject good cases

If a lender rejects your complaint or offers a low “goodwill” gesture, don’t be fobbed off – they want you to give up.

Here are some bad or irrelevant comments lenders sometimes make when rejecting a complaint:

• you made the payments to them on time – that doesn’t mean you could manage a higher limit;
• the account was opened over 6 years ago – if it was still open in the last 6 years the Ombudsman may look at it;
• you accepted the limit increase – that doesn’t make a difference! The increase should not have been offered if it was unaffordable.

You know if this card or catalogue has caused you difficulty – it’s easy to send a case to the independent ombudsman. Don’t delay doing this!

How to send a case to FOS

Send FOS a complaint using their online form.  You can use bits of what you put in your complaint to the lender. If the lender has rejected your complaint or given a poor offer, say why you think this wrong.

The FOS form at the end asks you to add supporting documents. Don’t bother to send A copy of your credit or finance agreement – the lender will supply that if FOS asks for it.

Send FOS a copy of your credit report, they always want to see it. If you have any old credit reports, send the oldest one you have, otherwise send the current one. You can download a statutory TransUnion report for free.

Also get your bank statements if they will support your complaint and send those to FOS too. Do not wait to be asked by FOS for these.
Ideally you want them 3 months before and three months after the account was opened and before /after any limit increase

FOS is a friendly service but not fast. Just use normal English, not legal terms. Using a claims company or a solicitor doesn’t help or speed this up.

Ask questions below!

There are hundreds of comments from readers who are using this template. It’s a good place to see how these complaints often go and to ask any questions.

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