How do MBNA calculate interest?

bjblackmore

Hi,

I have an MBNA platinum card, and always try to pay off the balance each month. Recently I've had to use it for work, as we're moving banks, and don't have company credit cards yet. Work always pays off my expenses claim either using the MBNA Giro cheque, or a direct transfer.

I January I had to put about £750 of work stuff on the card, along with £400 of personal stuff (shopping, 2 new tyres etc), which totalled a monthly end balance of £1,105. The statement date was 20th Jan, and the payment date was 13th Feb. I paid off £250 on 11th Feb, and work paid off the £750 expenses on the 13th, leaving £100 balance.

This month I've had to put another £1,200 on for work, most of it on the (12th & 13th Feb), and £80 for personal shopping, which will all get paid off before the next payment date (13th March). However I just noticed there is an interest charge of £28.99 on the 20th Feb (statement date), presumably for January, but everything bar £100 was paid off.

How do they calculate this interest charge? Is it for the outstanding £100? Or are they also calculating the £1,200 that was spend on the 12th & 13th Feb as well?

Thanks

Ben

Robert_Sterling_3

If you pay off the balance in full by the due date then ther is no interest charge. If you fail to pay the balance in full then there is an interest charge which is calculated I expect on a daily basis on the outstanding balance that day. Thus it can be consider that any interest paid is "the fault" of your employer. You borrow on your credit card to pay bills for your employer and you incur interest charges.

Wot a Chiz

bjblackmore

Hmmm, that sucks! In theory you could spend £10,000, pay off £9,999 before the payment due date, have £1 outstanding, but end up paying interest on the full amount!
I'll be adding the interest charge to my next expenses claim!

nomoneytoday

bjblackmore wrote: »

Hmmm, that sucks! In theory you could spend £10,000, pay off £9,999 before the payment due date, have £1 outstanding, but end up paying interest on the full amount!

Totally Correct !

shop-to-drop

Credit cards have always worked that way as long as I have had them (that's ahum 22 years).

bjblackmore

OK, an update to this thread for March's statement.

I'd paid off January's statement in full, then got February's statement on 23rd Feb, which needed to be paid off by 17th March. I had £1,600 on there, which was £400 personal, and £1,200 for work - 2 laptop purchases. I paid off my £400 on 7th March, (or a few days before, but the credit shows up as reaching my account on 7th March), and work paid off their £1,200 which was credited by 13th March. So the balance should have been cleared, (although I did spend another £200 on new business cards on 12th March, but this should count towards March's statement, not February's), however looking at March's statement, £12 interested was added on 23rd March, even though the balance was paid off in full.

So this goes against the theory that if you pay off the balance in full, you don't get charged interest!

Ben

CLAPTON

bjblackmore wrote: »

OK, an update to this thread for March's statement.

I'd paid off January's statement in full, then got February's statement on 23rd Feb, which needed to be paid off by 17th March. I had £1,600 on there, which was £400 personal, and £1,200 for work - 2 laptop purchases. I paid off my £400 on 7th March, (or a few days before, but the credit shows up as reaching my account on 7th March), and work paid off their £1,200 which was credited by 13th March. So the balance should have been cleared, (although I did spend another £200 on new business cards on 12th March, but this should count towards March's statement, not February's), however looking at March's statement, £12 interested was added on 23rd March, even though the balance was paid off in full.

So this goes against the theory that if you pay off the balance in full, you don't get charged interest!

Ben

You need to pay in full each and every month to pay no interest.
What you are seeing is the trailing interest from the previous month ..i.e. the interest accrueing from the statement date to the time you actually paid in full.
Once you incur interest then you need to pay in full for two consequecutive months before interest stops.

bjblackmore

Hmm, these credit card companies really like to bend you over and take advantage don't they!

Hopefully there won't be any interest next month as I noticed that they are also taking the minimum payment by direct debit on the payment date, even after the full balance has been paid off! They took an extra £33 on 17th March by DD which was the minimum payment, so that should cover this months & last months interest!

Ben

ronanmagee

Something similar my end, they compound the interest so you end up paying interest on top of the interest already charged until you make a full payment to clear the balance.

If you find you have been charged interest ring them up and and what the calculated interest will be on your next bill. Once they tell you then get this amount into your account straight away and clear the balance. If you do this early on in the billing cycle you'll find that you over paid on interest and when you bill is generated at the end of the month then you'll have a 'rebate' applied to your card. Example:

Jan: £7000 spend on card
Feb 1st: Bill generated, due by 15th
Feb1st - 15th: Spent £1000 on card
15th: missed my payment
18th Feb: £100 interested posted to online statement (calcualted across full amount i.e. £8000)
19th Feb: Ring MBNA, what is my calculated interest due on 15th March - £66
20th Feb: I pay off £8000 + £100 + £66 = £8166

Mar 1st: Bill generated, due by 15th March: As I cleared my entire bill with interest and calculated interest I actually over paid, probably by £60 (£6 interest is the amount of interest incurred from 15th Feb - 20th March when I paid off in full).

£60 now comes off my bill generated on 1st March.

A bit complicated I know so the best thing to do is ring them up, ask what the calculated interest for next period is and ask what is the balance including calculated interest that you need to pay in order to clear the card. Get this to them ASAP.

Ronan