How did this happen?

jadecinema

Just had a statement through from Smile regarding my credit card. I cut up the last a few years ago so nothing has been spent on it in a while. I don't usually bother checking my statements online - I just pay the minimum 2% by direct debit. I know that only drags out the payments even longer but this isn't what this is about. Anyway, Smile have sent me a statement as they are changing the way their statements look etc. So this is what the statement said:-

Balance brought forward from last statement £3062.28
Direct Debit Payment made £62.00
Cardholder Protection Plan £23.20
Merchandise Interest £38.91
Cash Interest £13.56
New Balance £3075.95

So total charges for the month is £75.67 and I've paid the minimum of £62.00 so I now owe an extra £13.67 than I did last month.
I've no idea how long this has been going on but I always thought the minimum payment covered the interest. I've been naive and stupid not to check my statements as I could have spotted this sooner.
Is it right that the minimum payments should not cover all of the interest?
I know of the PPI reclaiming going on but I can't remember if I signed something to say I wanted it. I took the card out in 2000 and it's not been used since 2006 at the latest.
Any advice on what I can do from here, apart from upping my payments each month? Or can someone shed a little light on how the charges, interest, etc break down?

Thanks

Carl

Cat695

erm this points out why its not a good idea to just make minimum payments
or not bother checking your statements

merch

OP - none of the transactions refer to PPI. It looks like that you are paying for CPP though (www.cpp.co.uk). This is a different kind of 'insurance'.

Can you remember being offered and/or declining this??

jadecinema

merch wrote: »

OP - none of the transactions refer to PPI. It looks like that you are paying for CPP though (www.cpp.co.uk). This is a different kind of 'insurance'.

Can you remember being offered and/or declining this??

I've just been onto that website and from what it says, I think I understand what that form of protection does - ID fraud, etc. I don't recall ever being asked by Smile if I wanted that kind of protection and when I opened a new bank account with Alliance & Leicester, they did ask me if I wanted it and I declined it. So I'm sure that if Smile asked me if I wanted that sort of protection, I would have declined it with them also.

merch

Good - as you're sure, contact CPP to cancel the policy and ask for a full refund. They should be able to find you on their system no problem.

jadecinema

merch wrote: »

Good - as you're sure, contact CPP to cancel the policy and ask for a full refund. They should be able to find you on their system no problem.

Though I have just been onto Smile's website and found something about "credit card payment protection plan" which covers sickness, unemployment, etc. I'm wondering if the Cardholder Protection Plan is for that? I've sent a secure message to Smile to I'll see what they have to say about it. Thanks for the tip though.

merch

OP - You're right, I'm wrong on this one. The smile payment protection plan charges you 76p per £100 of debt which works out to £23ish for your current level of smile debt. Cancel this straight away then consider re-claiming all the monthly premiums you have been paying. You will have been paying this amount or thereabouts every month for quite a while!

(smile offer Sentinel card protection, an alternative to the CPP scheme - both offer about the same amount of value-for-money!)

merch

OP - in addition the direct debit for minimum payment, you could also consider setting up a standing order for an additional amount each month. Once you cancel the payment protection, you could set up the SO for £23. You wouldn't notice the difference 'in your pocket' and your smile debit would reduce (slightly) quicker.

With some cards it is the case that the minimum payment is less than interest/charges accrued. Especially when minimum payment is low and interest/balance is high. (smiles interest rate on cash is 23.9% apr). I reckon your cash withdrawal debt is £700 (very approx.) Until the rest of the debt i.e. £2300ish is cleared, this amount will continue to accrue interest at 23.9% apr.

jadecinema

Merch, if I had agreed to take out the payment protection, would it be on the original agreement or somesort that I signed back in 2000? I'm guessing that if I did agree to it back in 2000, I will just be able to cancel it but won't be able to reclaim.

I'll cancel the payment protection and see if I can get a copy of my original agreement and take it from there. While I do that, I'm going to pay the extra £23 a month like you mentioned, as well as seeing if I can get another card to transfer the balance to at 0% interest.

merch

The option to opt in or out of payment protection should be on the original paperwork. Sometimes it's not and sometimes you are 'offered' it at the initial stages of the credit card process i.e. when you phone to activate it. It is not always made clear though.
If you try to reclaim previous payments, don't be surprised if smile say that you have always had the opportunity of checking by looking at your statements.
Good luck at claiming and also with getting a 0% deal elsewhere. (I don't have to remind you to never spend or withdraw cash on a 0% balance transfer card!;) )

jadecinema

There's no way I would even consider spending or withdrawing cash on a new card. I cut up my old Smile card so the temptation wasn't there. Even if I don't get a new card, at least there is a way forward by cancelling the insurance and using that money to pay off - slowly - the existing balance on the Smile card. Thanks for all of your advice. By the way, will Smile charge me a fee to obtain a copy of my original agreement?