Credit Card interest

  dms05 18:25 03 Oct 2007

I always pay off my total credit card balance each month, normally by Direct Debit. However I have one card that I pay by cheque. Last month I transposed two figures and underpaid the balance by about 7% (on £700) and was charged more interest than the amount I had underpaid by.

Having not paid any interest on credit cards for 20 years it came as quite a shock to see the rates charged and the implementation of the interest calculations. Was I unlucky or am I the victim of a rogue credit card company?

However I've learnt a good lesson and all my cards are now covered by full payment by Direct Debit.

I did ask for clarification of the interest calculation which showed I'd underpaid. Without any request on my part the credit card company offered to reduce the interest payable to half the original amount. But I'm still surprised by an interest rate approaching 100% per year whilst advertised at 8.9%. I assume the latter is per month!

  spuds 19:37 03 Oct 2007

Normally with credit cards, if you under pay by 'any' amount, full interest rates are charged on the whole statement amount 'owing'.

Different credit card companies, have different rules regarding interest calculation dates, so its always best to know when and how interest charges are calculated.

Your flexible 'friend' can sometimes be unfriendly.

  interzone55 20:43 03 Oct 2007

Interest is now normally charged from the day of purchase, unless the balance is paid in full, and some of the rates are quite steep. Was the balance on this card based on a cash advance, or a purchase. Cash Advances attract enormous interest rates on some cards.

  dms05 21:40 03 Oct 2007

No cash advance or similar. All straight forward purchases. It still strikes me a £44 interest charge for one month on £700 of purchases is enormous. That would be £528 over a year on £700 or about 75%.

  PalaeoBill 23:59 03 Oct 2007

I would call them back and ask for the charge to be refunded. Explain that it was an accident and you have never do this before. In my experience credit card providers generally accept this kind of thing once and make a refund. They don't want to upset and lose a customer over it.

  interzone55 12:40 05 Oct 2007

Do you have payment protection? This really adds up, as it's typically 6% of the outstanding balance

  dms05 14:48 05 Oct 2007

Interesting point alan14. I'm not aware of any payment protection.

In any case I've now written to the card provider and said I want to cancel all my cards with them after spending about £70,000 on the cards in the past 20 years. I'll see if they still consider charging me £44 for an underpay of £69 was really the wisest thing to do.

My view is they need me more than I need them. My application to another card supplier is already completed.

I'll post again if the provider ever respond.

  spuds 15:08 05 Oct 2007

Good luck with your request. I had an 'oversight problem' last year due to non-delivery of combined statements, and what total piffle the telephone 'account managers' came up with was very surprising and unhelpful, so as to gain their little extra money for non-payment.I have spent many thousands over the years, being with the same credit card in the very early stages of credit card transactions.Loyalty classes for very little, or so it would seem.Eventually my problem was dealt with by 'higher up' management after my threat of severing our friendship. All interest and administration charges were dropped.

  jaymus 22:29 05 Oct 2007

Guys, if you underpay or post your payment too late your card you will be charged. That's the deal. That's how they make their money. It's really fair. There's no point escalating things up the ladder and moaning at customer service people. It's a fair cop. Accept it. Pay up and move on.

  spuds 22:59 05 Oct 2007

" There's no point escalating things up the ladder and moaning at customer service people". What nonsense, I hope that you do not work in customer services.

  tullie 07:10 06 Oct 2007

Hes right though!

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