Understanding Interest Rates on The HSBC Credit Card

Christopherj_2

I'm currently paying the minimum payment on my HSBC Mastercard credit card. My account balance is around £300.00. The monthly repayment amount is usually £12-14 a month, but it seems I am also charged £7.00 interest. Please could someone explain to me the charges. Is it because I am in debit with HSBC and I incur such charges until my I pay the balance in full?


Many thanks in advance.

benf90

Christopherj wrote: »

I'm currently paying the minimum payment on my HSBC Mastercard credit card. My account balance is around £300.00. The monthly repayment amount is usually £12-14 a month, but it seems I am also charged £7.00 interest. Please could someone explain to me the charges. Is it because I am in debit with HSBC and I incur such charges until my I pay the balance in full?


Many thanks in advance.

You'll be charged interest unless you clear the balance off in full each and every month.

As you're now paying interest you'll need to clear the full statement balance amount for at least two consecutive months in order for the interest to stop. It needs to be two months due to the way in which interest is accrued.

If you can afford to then pay off more than the minimum each month. Paying just the minimum significantly increases the length of time it takes you to clear the balance, which therefore increases the amount of interest you pay them.

Christopherj_2

benf90 wrote: »

As you're now paying interest you'll need to clear the full statement balance amount for at least two consecutive months in order for the interest to stop. It needs to be two months due to the way in which interest is accrued.

What do you mean for two consecutive months? I'm charged interest on a monthly basis.

benf90

Christopherj wrote: »

What do you mean for two consecutive months? I'm charged interest on a monthly basis.

I mean 2 months in a row, one straight after the other.

Lets say you clear off the full balance tomorrow and your balance goes down to zero. This would be the 1st consecutive month one of clearing the balance.

As interest is accrued on a daily basis there will be some interest that accrued from the last time interest was applied (your last statement) up until tomorrow when the balance is cleared.

This interest would be applied when the next statement is produced. You would then need to pay that interest off, as well as any other spending you do after tomorrow. This would be the 2nd consecutive month.

If you pay less than the full balance one month, even if its only 1 pence less, then you get charged interest and the rule of 'two consecutive months' is reset.

benf90

Further to my first post about the need to pay more than just the minimum amount, this guide/article on here may help explain things in more detail on why only paying the minimum should be avoided:

http://www.moneysavingexpert.com/cards/minimum-repayments-credit-card

Christopherj_2

I've paid £100 towards the £300 I owe and i'm going to be paying £40 a week until the debt is payed off.

How much interested will I be charged?

benf90

Christopherj wrote: »

I've paid £100 towards the £300 I owe and i'm going to be paying £40 a week until the debt is payed off.

How much interested will I be charged?

Oops just clicked the thanks button instead of Quote, oh well.

Nobody here can really say how much interest you'll be charged.

It depends on things like the day your statements are produced, when the payments are due etc etc.

What we can say though is that you'll be charged less interest than you would do if you only paid the minimum.

With the £40 per week payments in addition to the £100 payment it means you will paid off the existing balance in around 5 weeks. (Remember what I said about there being more interest though).

That means its 5 weeks instead of around 5 years that it would have taken with just the minimum amount being paid.

Christopherj_2

When I pay off my credit card and I close the account, let's say in a years time I want to reapply for the same credit card, would I be treated as a new card holder?