MBNA to fine credit cardholders for positive balances

MBNA, the giant American credit card provider, recently wrote to its credit cardholders informing them that henceforth if they carry a credit balance on their credit card account they will be fined £10. If the credit balance on the credit card account is less than £10, the credit cardholder will forfeit the remainder of the credit balance on the card.

Commenting on the new charge to be introduced by MBNA, Ander Hagger, of Moneyfacts, stated that: "This is the only instance of a fine for being in credit we've seen."

A spokesperson for MBNA stated that this latest policy is not intended as a revenue generating policy on the part of the credit card provider, but rather is a "tidying up exercise. We want people to get their money back. As well as not earning interest, positive balances do not have protection from fraud. This is not just about fining people for the sake of it", said the spokesperson.

However, Ander Hagger is not so sure: "MBNA says it's doing this to protect people's money for them but I don't know if that excuse holds water – fining people is hardly a good way to protect customers' money, is it? I’d say there is a real danger that people would be so offended they might take their account elsewhere."

Those who pay their credit card bills via standing order will likely find themselves most at risk of retaining a credit balance on the credit card as their monthly payment plans are fixed, whereas their expenditure is not. Nonetheless, MBNA is insisting that the fines are not one-off penalties for being in credit, but rather describe the new levy as being an "annual service charge" for credit cardholders who have credit card accounts in credit for a period of 12 months or more.

To avoid paying the charge, MBNA are offering cardholders one of three option should they go in credit on their credit card account – to transfer the credit balance to their current account, or to spend the credit balance on their credit card, or to donate the credit balance to MBNA's "nominated charity", which is currently Cancer Research UK.

Regardless, with credit card providers in the UK already charging high interest rates, annual fees and hidden charges, an additional fee merely for having a credit balance on your credit card account could well be the straw that breaks the camel's back.

Richard Smith
22nd February 2007

More Information:

• Credit Card Charges
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• How To Avoid Paying Those Pesky Credit And Debit Card Fees
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