Card holders charged for being in credit

Swingeing rates of interest. Annual fees. Hidden charges. For years credit card companies have charged their customers for borrowing money. Now one card provider has started punishing its cardholders for being in credit.

MBNA, the American credit card giant, has written to thousands of people in the past few weeks who have inadvertently paid the company too much money.

Carolynn Shaw, a mother from Sydenham in south London, received her letter last week. MBNA's missive tells her that unless she clears the positive balance on her card by the end of next month she will be charged £10 or – if less than £10 – the total amount by which her card account is in credit.

"When I first read it I just felt it was a bloody cheek. It's my money," she says.

Ander Hagger of Moneyfacts, the service that allows consumers to compare financial products, says: "This is the only instance of a fine for being in credit we've seen.

advertisement"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."

Finding yourself with a positive balance on your credit card is not as hard as it may seem. It can occur when a cardholder has overpaid their balance, perhaps if they had set up a monthly standing order.

Carolynn isn't sure how she ended up in credit: she hadn't used her MBNA card for about two years. "I'd destroyed the card and thought the account was closed," she says. "It was only by chance I actually got the letter. MBNA's letter was sent to our old address and the forward we had put on our mail from there is about to expire."

MBNA insists that its new policy is not intended as a revenue-raising measure. A spokesman claims it is in fact a "tidying up exercise". "We want people to get their money back. As well as not earning any interest, positive balances do not have protection from fraud. This is not about fining people just for the sake of it," he says.

The fines are not a one-off penalty. MBNA describes the fee as a new "annual service charge" for accounts that have been in credit for more than 12 months.

Unsurprisingly perhaps, MBNA isn't prepared to say how much the new fines will earn the company. Instead it claims that only a minority of the "thousands" of customers it has written to – again, the company refuses to say how many customers are involved – will receive the £10 charge.

Most will apparently take one of the three options MBNA lists in its letter: transfer the balance to a current account, spend the credit on the card or give the money to MBNA's "nominated charity", Cancer Research UK (MBNA says it has given £500,000 to this charity in recent years).

Barclaycard, Britain's largest credit card company, says it does not charge cardholders for being in credit and has no plans to do so.

Another provider, Virgin Money, suggests that the recent crackdown by the Office of Fair Trading on credit card charges would only force providers to conjure up new ways to make money out of their customers.

Carolynn says she is certain she will not be applying for another MBNA card in the future. She has also yet to decide how she wants to spend the outstanding balance on her MBNA account – assuming that she can act before the company claws back the balance.

"Actually there was only £1.05 on the card – which might just allow me to splash out on a cup of tea."

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