Card interest of £8 on £1 outstanding ?

Dim-Tim_2

I have searched this massive forum and cannot find an answer to this, so my apologies if I have missed it.

I have just received a statement showing that I have been charged interest even on the sum I have paid off.

I'll explain:
Last month my statement showed £791.
I paid £780 to arrive well before the due date.
That left just £11 outstanding.

This months bill arrived and showed that I had been charged £8.56 interest.

I phoned LloydsTSB and was told that this is normal. If the entire amount is not paid off I would have to pay interest on the entire amount (£791) not just the outstanding amount of £11. Effectively I have paid interest on what I have paid them.

I asked them if I had paid off all bar £1, would I still be charged £8.56 interest, they said "yes" !!

Is this really normal practice ?

Is there a card out there which does not do this ?

Thanks for reading, I appreciate any feedback you can give.

CLAPTON

Interest on CCs starts being added from the day you spend the money to the day you pay it off...... unless you make a payment in FULL... then the interest is not charged otherwise it is.

Yes ALL CC do this, its in the T&C

And its likely you will have a small residual interest charge next month .. this being the interest from the statement date until you actually paid it.
You need two consecutive zero balances to stop the interest being charged.

normanmark

It is normal practice indeed.

NickX

Someone with a similar spot of bother here on this thread :

http://forums.moneysavingexpert.com/showthread.html?t=1123655

Yep it is normal practice. If you don't pay the balance off in full you are charged interest on every purchase from the date of the transaction even if you are only 1p short.

Paul_Herring

Dim-Tim wrote: »

Last month my statement showed £791.
I paid £780 to arrive well before the due date.
That left just £11 outstanding.

This months bill arrived and showed that I had been charged £8.56 interest..

To put it another way:

Interest up to the statement date will have been included in the £791.

You have been charged interest on £780 between the date of the bill and the date of the payment, and interest on £11 for the whole period.

The only time you won't get charged between the date of the bill and the date of the payment is if you've been paying your bill off in full (which as others have said, takes two billing cycles to achieve.)

NickX

Paul_Herring wrote: »

You have been charged interest on £780 between the date of the bill and the date of the payment, and interest on £11 for the whole period.

This is the way that most cards work, but there is a growing trend which was started by Barclaycard to charge interest from the Date of the Transaction until the next statement date even if payment is received before the due date.

Effectively the payment is only applied to the account for interest calculation purposes at the time the next statement is generated. This actually negates any advantage to making a payment in advance of the Due Date.

blindman

I would suggest you ring them up (again) and pretend to be surprised about the charge-Be contrite.

Politely ask them to explain the interest charging system- as you are new to this...

Sound interested and crack a few jokes or compliment the Op in some way (sympathise with their long working hours, chat about trivial stuff) then sheepishly say thank you but as it is your first time of making this mistake could they refund you the charge this one time.

I.E Put on some charm and ask for a refund, you've got nothing to lose.

latecomer

Its certainly worth a shot. I once mis-calculated a full payment which left 2 pence on the card and I got an interest charge of about £10. I phoned up and asked about it and simply said that I'd obviously made a mistake with my sums. I pointed out that I always pay the balance in full and they the wiped off the interest charge but suggested I double check my figures in future as next time the charge would remain.

I've never done it again though

sdooley

Direct debit for the full balance will avoid this.

sazziecee

Strange, not about the OP's amount but about the other replies.

I had 24p outstanding on a barclaycard for ages and they didn't want a payment, or charge me interest as it was less than £1

In the end though I got sick of the statements and paid 24p over the counter

NickX

sazziecee wrote: »

I had 24p outstanding on a barclaycard for ages and they didn't want a payment, or charge me interest as it was less than £1

But if your balance was 24p, then the monthly interest would be around a fifth of a penny, so rounded this would be zero.

Recently, some providers are introducing Minimum Interest amounts of 50p or £1 which would have caused you a problem with this - paying up to 4 times the statement balance in interest every month :eek: