Credit card query re. not paying off full balance

chrisbuck10765 · 17 March 2018 at 2:30PM

Hi
My wife recently paid her credit card and left about £50 outstanding due to a miscalculation(she normally pays the whole balance off). The interest charged on the following statement was £30 !! and was charged on the WHOLE previous statement balance even though 95 % of it was paid off.
Is this standard practice now ? I thought interest was only charged on the unpaid portion or is it a specific John Lewis card condition??
Thank you for any info...

SainsburysAnonymous · 17 March 2018 at 3:29PM

Hi Chris,

interest will accrue if you do not pay off your statement balance in full by the due date

That's a pretty common rule for most Credit Cards.
Unfortunately, in your case since it has been a miscalculation the interest starts to accrue from when the transaction happens until when it's paid off (hopefully in full within the appropriate statement its due) When you don't pay it off in full you effectively get the interest on the full statement balance until it does get paid.

I would speak to John Lewis in this case and let them know that it was a simple miscalculation and hopefully she'll be able to do something with that £30 interest of yours!

Any questions let me know!

Kind regards,
Anonymous
:j

MallyGirl · 17 March 2018 at 3:32PM

This is how all cards work. Your purchases incur interest from the point of purchase to the statement generation point. If you pay in full then they waive that interest. Paying even a penny less means you have to pay the interest. A good reason to set a DD up to pay in full and then you can!!!8217;t make a mistake

Alexd52 · 17 March 2018 at 3:35PM

chrisbuck10765 wrote: »

Hi
My wife recently paid her credit card and left about £50 outstanding due to a miscalculation(she normally pays the whole balance off). The interest charged on the following statement was £30 !! and was charged on the WHOLE previous statement balance even though 95 % of it was paid off.
Is this standard practice now ? I thought interest was only charged on the unpaid portion or is it a specific John Lewis card condition??
Thank you for any info...

That’s how credit cards work. Interest is only waived if the balance is paid in full.

chrisbuck10765 · 17 March 2018 at 3:36PM

Thanks very much for the replies - I did not quite grasp that (greedy) concept - direct debit it is !!

redux · 17 March 2018 at 3:42PM

It's not greedy. The interest is retrospective and proportional to the amount borrowed and for how long. When you look at an low remaining balance and think of the interest that would be on this, that is a bit like looking forward instead of backward.

I appreciate that this time it was inadvertent, but anyone who foresees not being able to pay in full can consider reducing the interest a bit by paying earlier than the due date

SainsburysAnonymous · 17 March 2018 at 3:44PM

chrisbuck10765 wrote: »

Thanks very much for the replies - I did not quite grasp that (greedy) concept - direct debit it is !!

I personally wouldn't say it's greedy. It's how a Credit Card works.
As mentioned, speak to them and see if they can do anything with the interest.
Banks will give customers a lot of leeway - especially if it's an honest mistake.

bengal-stripe · 17 March 2018 at 3:44PM

Interest is calculated on the daily balance.

Let's say your wife had a balance of £1000 for 20 days, then a payment of £950 leaves a balance of £50 for another 10 days to statement date. These daily sums add up to the amount being charged.

It's only if the statement is paid in full that the accumulated interest will be scrapped.

redux · 17 March 2018 at 3:52PM

I forgot to also say interest will be running on that remainder now.

If the next payment is made in full there may be some trailing interest on the £50, though not on the new purchases. Most cards will charge this, but one or two seem to waive that too.

To avoid this pay £50 and a few pence now and the rest later, but it is maybe not to worry about, perhaps 40 to 60 pence by the due date. More to the point is to note it for the future if the outstanding amount is more.

SainsburysAnonymous · 17 March 2018 at 3:59PM

redux wrote: »

I forgot to also say interest will be running on that remainder now.

If the next payment is made in full there may be some trailing interest on the £50, though not on the new purchases. Most cards will charge this, but one or two seem to waive that too.

To avoid this pay £50 and a few pence now and the rest later, but it is maybe not to worry about, perhaps 40 to 60 pence by the due date. More to the point is to note it for the future if the outstanding amount is more.

Ah yes, the infamous trailing interest. Always a lovely conversation to have! :rotfl:

chattychappy · 17 March 2018 at 10:07PM

The calculation and application of trailing interest does seem to vary. Certainly I've had situations where trailing interest hasn't appeared where you would have expected it given the T+Cs.

I can only assume that some lenders take the view that it's just not worth the hit on goodwill for the sake of a relatively small amount of money - particularly if they then have to pay people in call centres to explain it to people who probably won't understand anyway.

Credit card query re. not paying off full balance

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