Card interest of £8 on £1 outstanding ?

Paul_Herring

NickX wrote: »

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:

You're overstating the case somewhat.

Example:

24p owed.

Interest of fractions of a penny rounded up to 50p

Total owed: 94p

Now tell me which credit card provider allows you to pay such small amounts "every month."

NickX

Paul_Herring wrote: »

You're overstating the case somewhat.

Example:

24p owed.

Interest of fractions of a penny rounded up to 50p

Total owed: 94p

Now tell me which credit card provider allows you to pay such small amounts "every month."

I'm not sure of the point you are making.

50p interest on a 24p debt is 200% per month, i.e. 1200% APR

You can pay any amount you want, the card provider does not distinguish small amounts.

Paul_Herring

NickX wrote: »

I'm not sure of the point you are making.

50p interest on a 24p debt is 200% per month, i.e. 1200% APR

The point I'm making is that there are no reasonable circumstances where you'd be paying that each and every month. And it's all very well quoting an outlandish APR figure, but when it's applied to such small amounts, it's meaningless.

You can pay any amount you want, the card provider does not distinguish small amounts.

You cannot pay "any amount you want." Most CC T&C's have a clause in them, whereby the minimum amount you must pay must be £5, or the full balance if less than that (or a %age of the balance, which doesn't apply in this scenario.)

NickX

Paul_Herring wrote: »

You cannot pay "any amount you want." Most CC T&C's have a clause in them, whereby the minimum amount you must pay must be £5, or the full balance if less than that (or a %age of the balance, which doesn't apply in this scenario.)

Ok Thanks, I understand your point now. You would not pay pennies every month because this clause would mean that you would have to clear the balance as part of the Minimum Payment. I do agree.

Even just one month paying interest of twice the debt would annoy me though, just on principle.

MarkyMarkD

I don't believe your point about Barclaycard is correct, NickX.

The change made was to charge interest from the date of the transaction, rather than the date of the statement which showed the transaction. Interest isn't charged beyond the date of payment on any card AFAIK.

There's nothing inherently unfair about that way of doing it. It simply means that rather than an interest free period of between 1-31 days, even where you don't pay off the balance in full, you are getting no interest free period unless you pay off the balance in full.


Regarding the OP's point, people need to forget the idea that they've been charged £11 interest on £1.

All that's happened is that you've paid the right amount of interest on the amount you borrowed, at the declared interest rate. But you've lost out on the interest waiver which they normally apply if you pay the balance off in full.

NickX

MarkyMarkD wrote: »

I don't believe your point about Barclaycard is correct, NickX.

The change made was to charge interest from the date of the transaction, rather than the date of the statement which showed the transaction. Interest isn't charged beyond the date of payment on any card AFAIK.

Hmmm perhaps I miss-read the change that Barclaycard made last year.

Are you saying that prior to this change in 2007 interest was only charged from the Statement Date, and not the actual Transaction Date ?

This would mean that by timing purchases well you could actually benefit from nearly a month of interest free credit even if you didn't settle the account in full every month. I did not know of any Credit Cards offering this and it would actually have avoided the situation that the OP has raised as the interest would only accrue from the Statement Date.

ICan'tStandIt

Paul_Herring wrote: »

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.)

It's normal. Why did you leave £11 outstanding ?

Paul_Herring

ICan'tStandIt wrote: »

It's normal. Why did you leave £11 outstanding ?

I didn't. You perhaps meant to quote someone else?

MarkyMarkD

NickX

This ancient article on the BBC website (from 2003) refers to banks which still charged on that basis at that point in time. It doesn't include Barclaycard, so if they did change they must have done so a long time ago.

http://news.bbc.co.uk/1/hi/programmes/working_lunch/2931776.stm (and find "Rachel Boyle").

I think the Barclaycard policy change must have been something else TBH.

NickX

MarkyMarkD wrote: »

I think the Barclaycard policy change must have been something else TBH.

There was a change to Barclaycard's Terms and Conditions around November 2007 which was basically saying that customers would be charged more interest.

I thought it was saying that you would be charged interest on the whole statement cycle irrespective of when you make the payment, but you have got me thinking that this wouldn't really be acceptable because you would be paying interest after you have paid the debt off. So perhaps I read it wrong.

If I can find the original paperwork I will check and post back.