EGG Card Interest Calculations??!!!!

suzymummy

Please can someone help explain eggs interest calculations? I pay off my egg card every month by the due date and have never had interst applied to the account. Unfortunately this month it was a little higher than usual £1789.74. I made three payments, one my usual £400 DD, and then two transfers, £480.74, £400 both from savings accounts leaving a balance of £179. All payments show as crediting on the due date. I wasn't too worried about a small amount stupidily thinking interest would be a few pounds. I have just received my next statemnt and have been charged £28.11 interest!! Having called egg I am now furious to find out that if the whole outstanding balance is not paid then interest will be on the whole amount irrelevant of whether more than the minimum amount is paid. I spoke to numerous people who themselves seemed unclear and kept refering to terms and conditions!?? I have since looked and again these make no sense. "If the account is not fully cleared, interest will be charged on the total value of the statement until a payment is made and then on the unpaid balance of the statement." The man at egg said I would have been better paying min amount and keeping money in savings as interest would have been the same!! Can someone shed any light on this policy.

leicsmarkyr

Yep its standard policy for all credit cards

normanmark

If you don't pay the amount on the statement thats requested, in this case £1789.74, by the due date. Then the following month interest is calculated on that whole amount. Not on the remaining amount.

So the £179 that was left on the account meant that a full payment wasn't made of the previous statement and they've calculated the interest.

Your best bet is to pay off the next two statements in full to stop any further residual interest on the account.

YorkshireBoy

Interest accrues on your account EACH DAY at the rate of...

balance x simple interest rate (%)* / 365

Each day's interest accrues in the background and is waived if you clear your balance (purchases only...cash & BT's are generally different) in full.

If you don't clear your balance in full, then the interest that has accrued is applied to your account on your next statement date (typically a few days after the previous month's payment due date).

The earlier you make your payments in the month, the less daily interest is accrued, so your man at Egg was wrong when he said you would have "been better paying min amount and keeping money in savings as interest would have been the same"...unless you have a savings account paying circa 16.9% AER of course!




* simple interest rate is your monthly rate x 12.

suzymummy

Thanks for your replies. If I had paid the outstanding balance of £179 before this statement would the £28.11 have been reduced?/

normanmark

If you paid the full amount of £1789.74 by the due date and it would of put the account to a zero balance then you wouldn't have paid any interest at all.

£28.11 is a fixed amount, it wouldn't be reduced, it only exists if you don't pay off that amount of £1789.74

suzymummy

If I pay the whole amount outstanding on my new statement will I be clear, no interest on the next one??

normanmark

No, there will be an interest amount on the next 2 statements.

1st statement = interest from the last statement to that statement date.

You make full payment on that one.

2nd statement = interest calculated from the previous statement to the date that you paid it in full (they have to put it on the next statement as they cant predict when you'll make that full payment)

So make full payments of the next two statements, before the due date and that will clear the interest.

suzymummy

OMG! This is shocking, wish I'd found that £179 from somewhere!! I hate dead money.

normanmark

Its how credit cards work unfortunately, thats how they make their money. They're not a charity unfortunately! At least now its a lesson learnt & you're more informed for the future

suzymummy

Every days a school day!! Just stupidly thought you'd pay interest on what you owed them. Did actually call them and went a bit mad about it and man did agree to refund half so I suppose that is a bonus!:T