Lend us your ears as we have some really great news that we are sure so many are going to be pleased with!
Vanquis is giving refunds to a million credit card holders who have had the Repayment Option Plan (ROP)! This is a sort of insurance, a bit like PPI. You can see if you have ROP by looking on your Vanquis monthly statement.
You don’t have to ask for this refund. If you have ever had ROP on your Vanquis card you will get one unless you always paid off the card in full every month. It will be credited to your account if you still have the credit card or a cheque if your account is closed.
Vanquis are doing this because they didn’t tell people the true cost of the ROP fees.
Small amounts of money every month add up
The ROP may have sounded really cheap, £1.29 per £100 a month. You might have thought that is only a bit over 1% so that’s a sensible amount to pay for some extra protection.
But whenever someone quotes you a monthly amount, think about what this will cost you for a whole year.
In this case, the ROP fee adds up to more than 15% in a year. Not that cheap is it?
Then compound interest on top!
But there’s more. You were told about the ROP fee. But Vanquis didn’t tell you that you also get charged interest on the previous fees unless you had cleared your balance. And this interest is at the very high-interest rate Vanquis charge – some people have been paying over 50%!
Einstein said that compound interest is the eighth wonder of the world: he who understands it earns it, he who doesn’t pay it.
Vanquis certainly understood it and all their customers have been paying it without knowing. If you have been paying this for years, the extra interest may well be more than the ROP charges themselves and because this isn’t shown as a line on your statement, you won’t have seen how much it came to.
It’s this extra interest Vanquis are refunding because it wasn’t properly explained to you.
How large a refund will you get?
You can’t tell by looking at your credit card statements how much extra interest you have paid. And the email Vanquis sends you just has the amount, not the details of how it was worked out.
You will get more if you have had the card for a long while and if your card had a very high balance for a long while. And the refund will be bigger if you paid 60% interest on your card then if you paid 40% interest.
I suggest you read this article that looks at what Vanquis are doing and concludes that the ROP interest refunds are too low. That gives you an email to send to Vanquis. It may get you a lot more money!
Why not cancel that ROP right away
I’ve written before about how making small changes to plug money leaks can help if there is more month left at the end of the money.
The same applies here. If you stop paying for the ROP, all the extra money that is going to the ROP will reduce your Vanquis account balance. If you have been finding it hard and expensive to pay off this credit card, ROP is making it a lot more difficult. And getting this refund now won’t reduce what the charges and extra interest are in future.
The ROP offers to freeze interest if you get into financial trouble. But it doesn’t actually pay off any of what you owe, at least PPI did that. And what Vanquis don’t say is that if you phone up and tell them you have lost your job, or you are on maternity pay for the next 6 months and ask for an arrangement to pay less, you can ask them to freeze interest and they have to consider it even you don’t have this ROP.
It’s not easy to decide to cancel a sort of insurance. What if you need it at some point? But this one is SO expensive at 15% per year plus all the extra interest. It doesn’t look like good value for money at all and paying it is making it hard for you to clear that expensive credit card balance.
We hope we have given you enough food for thought? Do let us know because it is your money (if you happen to be affected) and you deserve to get it back.
Don’t spend it all in one go now, and do make sure that you are sticking to your budget.