Egg Money interest calculation

Dagobert

Part of my payments were not received on time by the due date. As I normally always pay my credit cards in full I am somewhat astounded how I could have racked up so much interest in a few days. Perhaps someone can calculate this through for me here:

statement:

Payment due date Friday, 6th Jan
6.9% APR
balance £868.14

The following statement:

06 Jan 2006 PAYMENT 2 EGG . GB £17.36 CR
06 Jan 2006 ADJUSTMENT TO PAYMENT £17.36 DR
06 Jan 2006 PAYMENT RECEIVED - £697.36 CR
10 Jan 2006 PAYMENT RECEIVED - £153.42 CR
12 Jan 2006 PAYMENT RECEIVED - £17.36 CR
27 Jan 2006 INTEREST AT 0.561 PER MONTH £5.53 DR

Explanation:
£17.36 was the minimum payment, which should've come off my current account. But it turned out that the DD had not been set up correctly either by Egg or my bank.
£697.36 came off my Egg savings a/c on the same day and on time.
£153.42 was a cahoot debit card payment initiated on Friday 6th Jan but was not credited until Monday, 10th.
When I realized the DD problem I paid the outstanding amount via debit card.

The largish amount (£153) was 4 days late. I would have thought the interest should be 153*(6.9/100) * 4/365 = 12p.

I also received a note stating Please note that since 1 September 2006 (as confirmed to you by e-mail August 2006) interest has accrued on any rotating balance on a card up to the point that payments have completed clearance onto both your Egg Money and Egg Card accounts., which I, quite frankly, did not understand.

magentadreamer

Unfortunately if you don't pay a CC off in full the entire balance gets charged interest.

YorkshireBoy

magentadreamer wrote:

Unfortunately if you don't pay a CC off in full the entire balance gets charged interest.

...and here's the relevant text from the Egg Money credit agreement...

4.3 When you owe us any amounts on your Account, we will charge interest on all amounts making up the Balance on a daily basis at the relevant rate set out in Condition 4.1 above from the date each Transaction and Charge is made. Interest will be charged until the Balance has been repaid in full...<snip>...

http://new.egg.com/visitor/0,,3_79778--View_1666,00.html

Dagobert

magentadreamer wrote:

Unfortunately if you don't pay a CC off in full the entire balance gets charged interest.

I am stunned. (OK, that's the paragraph of the T&Cs I don't bother reading because I always pay in full. Why I didn't this time is another question.) Shows you how naïve I was.

Let's clarify the interest first of all.
The complete statement balance due on 6th Jan was £868.14.
The last payment was credited on 12th Jan. That means 6 days for £868.14 @ 6.9%. I make that £868.14 * (6.9/100) * (6/365) = £0.98.

What am I missing?

MPH80

Dagobert wrote:

I am stunned. (OK, that's the paragraph of the T&Cs I don't bother reading because I always pay in full. Why I didn't this time is another question.) Shows you how naïve I was.

Let's clarify the interest first of all.
The complete statement balance due on 6th Jan was £868.14.
The last payment was credited on 12th Jan. That means 6 days for £868.14 @ 6.9%. I make that £868.14 * (6.9/100) * (6/365) = £0.98.

What am I missing?

What you're missing is that they aren't just charging you interest from the date it became payable - they are charging you interest on the entire balance for the entire statement period.

So - to calculate the interest - it's the amount payable on the last statement multiplied by the appropriate interest rate for the entire period - and then allowing for payments made during the time.

So it could be 868.14 @ 6.9% for 30 days ... plus £170 @ 6.9% for 4 days ... plus 17.36 @ 6.9% for 2 days.

That 30 days is just an example - but that's how it works.

M.

Milarky

Dagobert,

You've got off fairly lightly with this experience as your standard rate is 6.9 (and mine is 15.9). I slipped up with making the debit card payment on the same day as the due date and then noticing that they weren't saying these applied on the same date anymore (eg did a payment in November and it did apply on the same date)

You might like to know that I got my interest back in the end by arguing that on the 3rd Jan they had conflicting information about payment times in the secure area, on which I relied even, though they then told me that they had notified customers of the change (to longer payment times) back in August. It might work for you as they updated the information a few days later - between 6th and 10th January I'd say -based on 'when' I wrote what I wrote. But if you didn't rely on the wrong information, because you didn't read it there at the time you made these payments, you couldn't really complain.

Just chalk it down to experience - and keep a sufficient buffer in Egg savings to settle the card balance as you nearly did this time - internal transfers will remain 'same day'. Remember also this 'backcharging' of interest is the same for all credit cards offering interest free periods on purchases.

creditcardking_2

The same thing happened to me, got charged £20 interest for paying off total balance 2 days too late.

grumbler

Dagobert, be also aware that with many other cards if you pay balance late or not in full you lose interest-free period on purchases for next month too. I think it is not the case with Egg though.

Dagobert

I will probably have to file the £5 interest under stupidity or experience.

But there are still two things that puzzle me:

1) When I opened the Egg Money account I had to specify a current account for the minimum payment to come off by DD. Shortly afterwards, I received a letter telling me that I had chosen an unsuitable a/c no '00000000' (Egg can't handle all zero accounts.) However, they must have had a bug in their software as I had given them my correct a/c no, which did, in fact, show up correctly online. I notified them of the problem and received a secure mail shortly afterwards stating that they had now set up the DD.

One working day after the payment due date, I was notified that the DD had failed. Egg claim that the DD was rejected by my bank because there was no DD set up. And hence they believe it must've been cancelled. Unless I am suffering from amnesia, I can't remember removing the DD.

2) I am not quite sure how the debit card payments work. I was under the misconception that debit card payments were credited on the same day. Weeks before the due date, in December, I made a test payment with my Bank of Scotland d/c. Indeed the amount was credited to my Egg Money card on the same day.

Stupidly, I assumed this was going to be the case every time and for every d/c. When I enquired, Egg told me that "this type of payment" may take 3-5 working days and that I would have to ask the d/c provider about the delay.

Question: is the timing determined by Egg or by the provider of the d/c?

Needless to say, I will never ever cut it that fine again.

Dagobert

Milarky wrote:

(eg did a payment in November and it did apply on the same date)

I made a d/c payment on 7th Dec and it was on applied the same day, which is what I mistakenly relied on in January.

Milarky wrote:

on the 3rd Jan they had conflicting information about payment times in the secure area

can you elaborate a wee bit more? What exactly did it use to say?

YorkshireBoy

Dagobert wrote:

can you elaborate a wee bit more? What exactly did it use to say?

I recall that Milarky made a lengthy post on this subject recently (it may have been a thread starter), in which he compared what used to happen with what happens now. Perhaps if you search 'other posts made by Milarky' you'll find it?