Do banks stop charging interest when they freeze a Credit Card?

[Brendan Burgess]

In this very interesting case, it appears that Bank of Ireland stopped charging interest on a Credit Card account when they froze it.

They got a judgement against the Credit Card holder which allows him to pay it off over almost three years but no further interest accrues.

Is this the law or is it just the practice of Bank of Ireland?

 

[Silver2]

Well with my BOI Credit Card Debt, the canceled my card, and my credit card limit became zezo: is that what you mean by frozen?

So I arranged to make monthly repayments, however the told me that there was nothing the could do with regards the interest.

Maybe I should contact them again: see if it could even be reduced to a lower rate.

I think if the case goes to court you might get the interest stopped, but without it going to court. I dont think you would have much hope to be honest.

 

[elcato]

I think it may be once they decide to cancel the cards and take legal action that its frozen. Many moons ago I was in court for a CC debt and they made a point of telling me that they were not charging interest over the previous two years or so (It was BoI). As an aside, the judge ruled that it be 'adjourned generally' and we were sent on our merry way to sort out how it could be paid.

 

[mf1]

My understanding is that once a judgment is obtained, interest accrues on that judgment at Courts Act rate - that is currently 8%. I don't think that a court can order that no interest can be charged from the date of judgment but it is fixed at Courts Act rate. A Court has discretion to award Courts Act interest from the date the debt accrued to the date of judgment - this would be unusual and it is why creditors should seek judgment at the earliest possible date in cases of default.

I suspect that in this case the Bank took the view that whereas, technically, they are entitled to charge Bank interest on their debts up to the date of issuing proceedings and , very likely, until judgment, that it made more sense, tactically with this Judge, to seek judgment on the actual debt only.

mf

 

[Bronte]

I understood that in the OP's case no interest was charged by the bank from the moment they froze the account. OP in his original post made a point about the judge making some comments to the bank and this may be why the bank didn't look for interest as MF1 said.

Frankly I'm amazed the bank didn't go for interest but I'm cynical and I think it's because they can't be seen to be not treating borrowers kindly when they probably should not have let people get into such debt by throwing money at them (cheques sent to people with credit cards) and increasing limits without being asked. Some people were plainly not suitable candidates for credit cards in the first place.

 

[startagain]

Just to point out, and im not sure where i stand on this but in the original civil summons it did state that interest was stopped and on the other civil summons i received for the bigger debt too, in my case i think they would just be happy to get back some money =)

in the summons it says " further the plaintiffs waive continuing interest at the rate or rates applicable to the account or accounts of the defendent from time to time for the purpose of obtaining judgement herein"

 

[mf1]

"in the summons it says " further the plaintiffs waive continuing interest at the rate or rates applicable to the account or accounts of the defendent from time to time for the purpose of obtaining judgement herein""

OK - the Bank have opted for tactical reasons not to seek the additional interest. Better to get the judgment which can be enforced than to spend a day arguing with a Judge who may well get the wrong end of the stick anyway and whose judgement may well have to be appealed - at additional cost to both parties.

I'm not sure I agree with you, Bronte, as to why that is. I am aware of people who knew exactly what they were doing when they were spending the Bank's money, knew it had to be paid back and now are all high and mighty about being lent money to at all. That makes my blood boil.

mf

 

[jack2009]

I think it may have something to do with the bank and even the account manager at the time. I know in the case of a receiver being appointed that the banks are allowed to keep charing interest. However, in many cases they waive this right on the basis that they are happy to get as much of the equity back and to cut their losses when it comes to the interest that has accrued post appointment.

Perhaps a similar logic is applied to credit card debt.

 

[Bronte]

"
1. OK - the Bank have opted for tactical reasons not to seek the additional interest. Better to get the judgment which can be enforced than to spend a day arguing with a Judge



2. I'm not sure I agree with you, Bronte, as to why that is. I am aware of people who knew exactly what they were doing when they were spending the Bank's money, knew it had to be paid back and now are all high and mighty about being lent money to at all. That makes my blood boil.

mf

1. Just to clarify you mean it's easier to enforce a judgement that has no interest?

2. I understand what you mean in the case of people who deliberately borrowed without a thought to how it would be paid back, (and what percentage would that be?) but there is no doubt that the banks were beyond reckless in their lending. In any case early on when people were not paying back their debt properly the banks should have ceased loaning, increasing overdrafts and consolidating to those people who did not or would not service their debt.

Startagain - we are referring on here to borrowers/bankers in general and not specifically to your case, if you know what I mean.

 

[mf1]

"1. Just to clarify you mean it's easier to enforce a judgement that has no interest?"

If you are a creditor, its important to get a judgment.

It can be hard to get a judgment but once you have it, you can enforce it.

So very often, for tactical reasons, and, in an effort to get a judgment quickly, a creditor will waive entitlements such as interest. The debtor is getting a good deal and a judge is less likely to quibble.

mf