What Is Trailing Interest?

leeannc2

I have recently paid off my balance of £2769 from my barclaycard visa. I have never missed a payment and always paid over the minimum payment. I paid the balance off in full before the payment due date. This month i have recieved a bill for £50.16 so i phoned barclaycard who said its a trailing interest from previous month. She tried to explain this but it doesnt make any sense what so ever as the months interest was added this month and does every month can anyone please HELP as im not happy its taken me a very long time to finally pay this off (8 years). Thanks hope to hear from some1 soon. :mad:

CLAPTON

basically it works like this
once you start paying interest on a CC, the interest accrued up to your statement date is shown on the bill.
However there is a time between the statement date and you actually paying the bill.... they charge interest on the balance outstanding during this time.
so even if you then pay in full the following statement will show the interest 'trailing interest'
Once you have cleared the card for two consecutive statements there is no further interest.

all CC work like this.

msmicawber

Hi leeannc2 - have a look here as I think this gives a good definition: http://www.extracreditcards.com/trailing-interest/

leeannc2

Hi thanks for your replies you have now put me at ease i finally understand it :rotfl: i was starting to get worried there that every month i was going to be getting a trailing interest bill for the years ive had the card lol thanks again im now happy again. :beer:

lbirkett1

I had a similar experience with Barclaycard. I rang to enquire about the outstanding balance when I had transferred the full amount before the payment due date. I was also totally confused by her explanation of trailing interest. I have transferred balances in the past but never encountered this before. I stuck to my guns and they credited the amount to me! It was only a few pounds though.

latecomer

thats one of the biggest problems, the call centre staff usually do such a bad job of explaining what it is that it just makes matters worse.

the first I encountered it I phone back twice to get clarification and it was only on the 3rd call that someone did a good enough job of explaining it that I understood what was going on and I like to think of myself as reasonably intelligent.

mcsurrey

I had not been charged trailing interest until Feb 09 statement from Barclaycard. I complained by email. I have been credited with the charge. Does the following reply from Barclaycard mean I need to pay in advance of the payment date and they are treating as an overdraft facility?

"On checking our records, I note that the interest charge you are referring to is the trailing interest.
Our Terms and Conditions permit us to charge trailing interest, however up to now we have waived the charge and funded the cost of borrowing ourselves. We will now charge interest from the date of the statement until the date the full payment is made. This interest charge will show on your next statement.
This change reflects the increasing costs of providing credit card account facilities and brings us in line with our competitors. The change we have made will only affect customers who pay their statement balance in full when they have previously only made minimum or partial payments.
I am pleased to confirm that the interest charge applied to your account has now been refunded in full. You will be able to view this refund on-line under 'Recent Transactions' and on your next month's statement.
I trust this information is of assistance.
Should you have any further queries, please do not hesitate to contact me again."

The_Architrave

I got caught by trailing interest on my Egg card and to add insult to injury they have a minimum of 50p even though it should only have been a couple of pence.

Moggles_2

AFAIK, all credit cards charge trailing interest (or residual interest as it's sometimes known) if you decide to pay off your statement balance in full, having made the minimum or a partial payment the previous month.

That said, (following a change to its Ts & Cs circa November 2007) Barclaycard now credits payments to your account on your statement date, regardless of when the payment is received. This means that, unlike most credit cards, there's no advantage in settling up early. If you make a payment before the payment due date, this lender will not reduce the interest-bearing balance until your next statement is produced. :rolleyes:

Jay_Kay_5

The comments here have been a great help! I have an lpf (littlewoods personal finances) card which is under the same umbrella as Barclaycard. I generally pay my balance in full and have never been charged added interest before.
In October last year I noticed some fraud transactions on my statement so I rang to report it to lpf and advised that I would stop using the card until the fraud was cleared from my account, and thinking my card would be stopped and I'd be issued with a new card. I paid for what I had actually purchased with the card in full.
November and there were some more fraud charges on my statement, as well the fraud charges from the previous month were still showing. I rang again and this time said to the operator that I think my card should be stopped and that I should be issued with a new card. I also said I will not use my lpf card until the fraud was cleared from my account. I asked about how much I should pay as I wanted to clear my actual balance and when I should pay. I didn't get a satisfactory answer so I decided to wait until I had notification from lpf. Eventually I gave up waiting since the due by date was closing in and so I tried contacting lpf again. After a few attempts I managed to get through to a human voice but by now the due date for my statement had elapsed. I was told the balance of my account and even though I wasn't certain if this amount was correct or that the matter of the fraud fully resolved I said I would pay and was immediately put back to the automated service.
Bear in mind that I have difficulty using this service as I am deafened and if I miss anything this automated voice says I can't ask for it to repeat the words I don't understand. It's stressful enough having to use an 0845 number and bear the costs of these calls as it is but for me it takes longer! I usually pay my bill at the bank but I was aware the bill needed paying the quickest way possible so I pressed on grinning and bearing the frustration I felt!
Anyway the next thing I knew I was being charged interest and charges I knew nothing about on my next statement. I wrote to lpf about this. Then I started getting phone calls and often dealing with someone in a call centre whom I could not understand at all because of their accents (regardless how many times you tell a call centre to repeat clearly etc they are so busy rushing through their daily quota of calls that I wonder if their bothered at all.) I wrote again to lpf.
Finally I have been told (by phone) the interest is trailing interest and that if I pay it now then the other charges will be waived. Happy I am not. It's enough that lpf have a high monthly interest charge as it is without having this trailing interest!
Use lpf ever again... no I won't. I had been a lpf customer for many years without any hassle but now my card is destroyed and to them I say no thank you!

mrsmoore1981

Hi Everyone! Just been reading your posts about trailing interest as I've just had a rather frustrating encounter with the staff at Barclays!

I have got a Barclays current account with an overdraft facility of £1000 and an overdraft of £800. This is no longer my main current account and I've been paying off small chunks of the overdraft every month.

Am now in a position where I can close the account and pay off everything I owe but when I tried to do this I got introduced to this trailing interest notion!!

When I checked the account a couple of weeks ago I was £804 overdrawn. Interest of £16 has since been added on, and apparently the total cost to close the account will be £840! I have no objection to paying the £16 as I agree that is interest earned but how can they add on another £20 out of nowhere!?

Please explain this to me someone as I left the branch saying that I wanted to look into this! I think it is very sneaky and the staff at the branch were looking at me like I was thick for not understanding their boffy language! :mad: