Credit Card Interest Charges

  Cannuck 01:18 22 Jul 2006
Locked

How many of you actually check the amount of interest that your Credit card comapany charge you?
Ninety-nine times out of a hundred I usually pay off the balance owing each month, but last month I bought a new car, so I didn't pay off all I owed, leaving a balance of £100.00 exactly.
Lo and behold the new bill came in over a week ago, and I was charged £10.37 interest on the £100.00.
I checked back to the other time a year ago last March when I didn't pay off the full balance, and had a balance of about £30.00 and was charged about £3.00 interest on that amount. This works out at about 10% per month, or 120% APR.
I called the credit card company, and got through to their call centre (thank goodness they were footing the bill, an 0800 number) after being shuffled about, I finally spoke to a gentleman, who, I am sure resides in India, but that's another matter. He was very helpful, and tried to assure me that everything was done correctly, and they don't make such errors.
I finally got him to see my point, and he agreed that there was a mistake, and would forward the info to the correct department, and the bill would be corrected in a couple of days
I called again yesterday, and guess what, it was not corrected. To cut a long story short, the lady I got this time fixed it straight away by crediting my account, and was full of apologies.
I have checked my account on the website, and she has done as she says, but here is an interesting slant to this, that credit has not been taken off the bill I owe for £110.37, as this is what I still have to pay by next week. It is put down as a new transaction, and will be on next month's bill, for which I haven't had any other transactions yet.
I am only going to send them the £100.00, and I wonder if they'll have the nerve to charge me interest on the $10.37?
I have not named the Credit Card company, in case the FE feels I shouldn't, but they are a major player in this field.
I don't know if this is just an odd incident, but it is strange that the two times I have not paid off the monthly balance, I have been whacked with a 10% interest fee.
Just thought I'd let you all know, because quite a few people I have spoken to, never check what they have been charged for interest.

Cannuck

  rdave13 01:52 22 Jul 2006

Guilty as charged! I never check my interest charge.They must be inside the law to charge you this ammount as the CC industry are on the ball!

On my account recently i'm on a minus amount of up to £150 because of a refund but as they are a "credit" account I will see no interest.

A convenient way to pay safely but comes at a cost I believe. Pay them back £11 just to see the minus sign ...lol. By the way I use Barclaycard...only the best...sigh.

  €dstowe 07:02 22 Jul 2006

If you are in a position to pay off your credit card in full most of the time, then why use that instead of your normal bank account/debit card?

On the occasions you cannot pay in full - like your example of £100 - then an overdraft facility would be a cheaper way of servicing the debt or even a short term personal loan.

I have a personal credit card reserved for purchases where using the card has specific advantages (consumer protection on online purchases, airline tickets for free travel insurance etc.) and we have company credit card for fuel and expenses which has to be paid off monthly anyway.

I appreciate this is not you, Cannuck, but I cannot understand anyone who has multiple credit cards each owing many thousands of pounds. This seems to be a norm for many people these days. Living for today without a moments thought about the future and the huge burden that these ever accumulating debts bring on. A final point to anyone with a excessively large amount of money owing, debt consolidation (through the many companies that advertise this) does nothing to reduce the money owing. All it means is that you owe the money to one lender instead of many.

  namtas 07:37 22 Jul 2006

Pay the full amount that is being asked for now and then argue to get a refund, if you do not do this your account will keep increasing with interest added each month.

  BT 08:03 22 Jul 2006

When you only pay off part of what you owe, most Credit Cards charge interest from the statement date on the whole balance until the payment is received, hence what seems to be an excessive interest charge. This is normally explained in the 'small print' and how many of us read or even understand that.

  Cannuck 08:45 22 Jul 2006

I did use the credit card to purchase goods on-line, and wanted the protection of the Credit card. As you may have gathered from my name, I am a Canadian, who usually lives in the UK during our horrible Canadian winters, and if I need money, I have to transfer it from Canada. I usually go back to Canada in May, but due to family illness here in the UK, we are still here.
The point I was trying to make to everyone was, I got charged at 10% interest, instead of roughly 1% interest for the two times I didn't pay off the balance.
I didn't spot it the first time, but it stood out like a sore thumb the second time, when I was charged £10.37 on £100.00
I fully expected to pay an interest charge (APR 9.9%) but not at an APR of 120%
Rdave13, they can't be inside the law charging that amount, when we have a credit agreement at 9.9%
They were definately in the wrong, and have refunded me as I said, but I find it strange that this has happened to me twice.
I say it would be a Capital idea to check what rate of interest your charged

  v1asco 10:05 22 Jul 2006

My company charges interest on the whole of the statement amount, not what is not payed off.

I fell for this (once) when an emergency arose. The bill was about £4000 and I paid off about £3500, thinking the interest on £500 is bearable.
Imagine my surprise when the next statement came through. I queried it and was told it was normal they agreed to waive the interest for the month as my record was clean. Very good off them.

€dstowe

We use credit cards purely for convenience and the Air Miles and except for rare occasions pay off everymonth.
Why take money out of a Bank/savings account earning me interest when the issuers give me 50 (or less) days interest free? Paying £2000 for a holiday (lots of kids)at the beginning of the statement date will give me at least 40 days interest in my savings account.

  €dstowe 12:14 22 Jul 2006

Using a credit card and getting so many days grace to pay it back is fine but, please appreciate, as has been pointed out, if you don't repay the whole balance within the period of grace, interest is charged on the whole amount borrowed, not just that remaining.

If, bugle, you paid back £999.99 of £2,000 for the holiday, interest would be charged on the whole amount, not just the single penny that you didn't pay back and the interest, as has been also noted is at a very high rate - far more than you would earn having £2,000 in any sort of savings account.

  Forum Editor 13:31 22 Jul 2006

that it doesn't matter if you mention the name of your card provider, but I see that you've done that now, so I'll keep quiet.

  v1asco 14:39 22 Jul 2006

Thank you for confirming everything I have written.

I was pointing out one reason amongst many that people use credit cards, it works for me over the long term.

  spuds 14:49 22 Jul 2006

Having just had a swords drawn episode with my credit card provider of 40 years (guess who?). I can fully understand and have sympathy with anyone getting confused.

In reality, the interest charge is on the full amount of the previous statement on not on the outstanding balance. This interest will increase, unless the 'full' total statement amount is paid. Should you even have 1p outstanding, then the same rules apply.

In my particular case, I always pay each statement in full at the end of the month, always have (except once). About four plus months ago, due to a once in a lifetime oversight, I received two statements showing a large amount of interest charges and administration fees costs. Shock and horror set in, and an immediate telephone call was made. It transpired that the usual two statements in one envelope had been lost in the post, and at that particular time I was having computer problems. So in actual fact it was a combination of my fault for forgetting about the none receipt of statements, and doing nothing about it, and the postal or banks fault for perhaps not sending or delivering the statements. In other words, a genuine honest mistake had been made.

Contacting the credit card company, it was a situation of four different peoples attitudes in resolving the issue.I won't go into full details, due to the complexity of the issue. It was a case of "Will do" (but didn't) "Cannot do" (Why?) "Perhaps" (My decision is final- Who sez!)and "Have done". The "Have done" was from a senior manager who I 'insisted' that I had a discussion with, because "Perhaps" tried to imply that their word was final. Result of my 'insistence' and an amicable discussion and eventual common sense, was the cancellations of the administration fees and interest charges, and the accounts were returned to normality.

Oh I do love it, when someone of lower rank, tries to show authority ;o).

After 40 years of loyalty, dealing with 'my' credit card company apparently counted for very little in the eyes of 'account managers'. This is an experience that I would not wish on anyone. And through this experience, it will never be repeated again (I hope!).

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