Post by propman on Feb 4, 2020 15:36:06 GMT
Feb 4, 2020 8:45:03 GMT squid said:
The total fee to withdraw from my account is 7.47%. Well in excess of one year's interest. Thank you Matthew It might feel like they are dipping into your capital - but the way LW spin it they are not - they are just reducing your average interest rate.
Credit card companies tried it (or something similar from the borrower pov), but the practice was deemed unfair and was shut down
www.investopedia.com/terms/r/retroactive-interest-rate-increase.asp
Most UK credit cards have variable interest rates. There are periods of notice for changes, but they apply to all amounts still outstanding at the end of that period.
AIUI there is no change on interest already earned and the cut in interest rates being applied has not exceeded the interest originally due, the only retrospection is the estimate of returns.
The Stats is showing different expected returns for each cohort, with 2017 the lowest at 4% on growth and 3.7% on flexible. Even on 5 year loans, you would expect over 2/3 of the interest to have been paid in the first half of the loan, so to deliver 4% overall, little more is probably expected. As a result the sell out of these will need to compensate for most of the 5.4% interest due to the new investor for the rest of the loan term. Hence the sellout for these will be much more expensive to reflect the poor performance of this cohort (8.2% defaults to 31/12/19).