Three sets of interest on CC Statement

arunadasi

I've always wondered about this but never had the courage to approach them to ask.
Why are there always two or three sets of interest on my CC statement?

To explain: my natwest cc is chronically at its limit -- please don't ask; I know it's bad but other debts have been a constant priority. The balance is usually around the £4500 mark. I really only use the CC when I go abroad, which is quite frequently, to pay for things I cannot use a debit card for such as booking rental cars. But even when I have not used the card, three sets of interest are taken off.

Example of a statement, June 2008:

Balance from previous statement £4721
Two payments received, £500 in total.
No cc transactions

Then, on June 26th:
Interest 45.03 -- SEE SUMMARY
Interest 8.97 -- SEE SUMMARY
Interest 41.88 -- SEE SUMMARY


In the SUMMARY it says: (edited to add: sorry, I couldn't get the figures neatly aligned in columns, lost the formatting after posting
The three figures are for: " Monthly Interest Rate" " Interest included above" " Outstanding balance")

(Edited to add: I've now colour coded everything)
Puchases: 2.075% £45.03 £1,909.15
Cash: 2.075% £9.97 £428.97
Money Transfer: 2.075% £41.22 £1,990.36

So the total interest was almost £100!

How does this come about? I neither made any purcheses, took out cash, or made a money transfer. Why isn't there just one figure for the whole debt?

There are always at least two of these interest deductions on my statement, sometimes "money transfer" is not there.

Kavanne

From that looks like you have withdrawn cash.. have you used the card for bingo/online poker/any form of gambling? As those can count as a cash transaction.. Have you phone natwest yet to ask?

arunadasi

No. I don't play bingo or gamble. In the statement above the only transaction was money coming IN to the account in the form of £500 in payments. I never used the card at all; like I said, I only use it for things like buying tickets online when other cards aren't accepted. Rental car companies always want your CC so I also use it for that. I almost never use it for cash, and yet "cash" interest is always on the statement.

As for phoning Natwest - I have a bit of a phone phobia; better for me would be to actually take the statements to a neutral person (not Natwest) who could explain it to me .

Kavanne

You said you almost never use it for cash!? what does this mean? did you use it for cash some point in the past? Seeing as you have had the balance on there for a long time (indicated by you saying you are 'chronically at the limit'), you need to think back faaaaar.

Eydon

If you've used it to withdraw cash at any time then you'll be charged interest on those transactions until you pay off the entire balance. It's all to do with the way credit card companies allocate your payments. Most use your payments to pay off transactions with the lowest interest first (normally purchases), and since cash withdrawals attract the highest rate of interest they'll be the last to be cleared.

Having said all that it looks like your purchase interest rate is the same as your cash withdrawal interest rate, which is unusual. Even so, I'm guessing if you check your T&Cs about the allocation of payments, it'll say that cash withdrawals will be paid off last.

anotherpaul_2

Hi arunadasi,

It's odd that there are three amounts, however, since they are all at the same interest rate, I wouldn't worry about it too much, if you can. It's an issue if they start charging you different rates on the different transaction types.

I've done some calculations in Excel and the interest calculations look correct (assuming you paid the £500 roughly midway through the interest period - which might not be half way through the month - it would have come of the purchases bit of the balance.)

If it's definitely a concern and you can't phone them (my girlfriend has the same issue) could you write to them and ask information? Say you want to have a written reply rather than a phone call. Start with the customer service address and if you don't get a reply in (say) 3 weeks, send a copy to the complaints address (or just start with them).

But, as I say, it's not currently costing you any more money.


If you write, it might be asking if they would also reduce the intest rate - some of them will and it doesn't really hurt to ask. 27.9% APR is fairly high.

Hope this helps,
Paul

normanmark

Some cash transactions have taken place on that account at sometime. Be it withdrawing from a machine, buying foreign currency or gambling transactions

jenkofreeze

I think it's my Mint card that has the three sets of interest laid out with amounts for that month. I find it VERY helpful and wish ALL statements were laid out like this.

Clearly in most cases the highest interest rate will be locked in at the bottom, but seeing how much you need to pay in order to start even paying that highest rate off would be a great motivator!