Egg DO charge interest when you pay off your card in full!

moomintroll_3

Hi.

I paid off my egg card last month after using my 5 month 0% anniversary during which, unfortunately, my wife made a small purchase on the card which obviously accrued interest (only pennies but she won't make the mistake again!)

When I paid the card off in full I expected that to be the end of it. Instead this month I find they've charged me interest again. When I queried it I got the following response:

egg wrote:

I've checked your account and can see that your current balance is xxx.

As your balance wasn't cleared in full each month, it became a revolving balance and interest was then charged to the account on a daily basis. Therefore the period between the statement being produced and you changing your direct debit to pay the full statement balance, is a time when interest was accrued. This interest charge is then shown on the next statement.

Therefore the current balance is made up of interest from the previous balance. We're unable to make any refunds for this as it was applied correctly.

Thanks for your message.

In other words, even though the card was paid in full they charged me around 14 days interest because the DD didn't come out of my account on the day of my statement! Now, admittedly this is at least partly my/our fault I find it pretty amazing that they're doing this. They certainly never used to - the card being paid in full on the DD date didn't incur any interest on the following statement even if you did have a revolving balance.

Just one to be aware of and I thought other people might get caught by this - I think of myself as pretty financially savvy but I was caught!

G

YorkshireBoy

The answer is simple. Your purchase was attracting interest from the date debited to the account until repaid in full.

Due to the Egg Cards 'order of payments', your payments go towards the BT first, and only when this has been fully paid off, will they go towards the purchases 'revolving' balance.

You will likely see another interest charge on your next statement for the period between the statement date and the date you made your payment.

It's not unique to Egg - many (most?) credit cards apply your payments in this way.

muffle_2

They try to catch you out at every opportunity. Basically you have to play by THEIR rules which are specifically designed to make them money.

You're lucky you only incurred pennies of interest on that purchase. Other cards would have charged you interest for the whole month on the FULL balance even if you paid off the balance transfer.

From my understanding of your circumstances, the revolving balance was from the balance transfer which you paid off in full, albeit 14 days after the statement date. If that's correct then I am aware of this, but not because the banks told me! I almost fell foul of it myself with my Egg anniversary offer until I checked the T&Cs very carefully and discovered the offer expired on a date which didn't match my statement date. The T&Cs didn't specifically explain that this would mean interest would be incurred immediately, but I figured this out myself. So I made sure it was paid off on the date the offer expired.

This is a deception on Egg's part as most people would expect the payment to be due on the statement's due date. In fact balance transfers incur interest from the date the transfer becomes 'active', in this case the first day of the statement when your 0% offer expired. This is how they make their money on this offer - they make sure it expires before the statement is due.

Again, other cards would have charged the full month of interest, Egg is the only card I know of that charge interest daily on purchases at least (but only on the green card, NOT Egg Money). I assume it won't be long until they remove this feature too. I don't have much experience with balance transfers so I'm not sure what the norm is for those.

I am growing increasingly fed up with how credit cards find ways to rip you off. The OFT should tighten the rules to make them simpler for consumers to understand and to stop being charged at every opportunity simply because we don't follow some ambiguous banking rule.

If I didn't need cards for my business I would have cancelled all but one of mine a long time ago after being stung so many times.

muffle_2

YorkshireBoy wrote:

The answer is simple. Your purchase was attracting interest from the date debited to the account until repaid in full.

Due to the Egg Cards 'order of payments', your payments go towards the BT first, and only when this has been fully paid off, will they go towards the purchases 'revolving' balance.

My understanding is the interest in dispute here was from the balance transfer and not the purchase. He mentioned that lot of interest at the start of the post.

I don't think he will get charged interest on the next statement unless he fails to pay this one in full.

Another e-mail from Egg which failed to properly explain anything.

dangeroussports

Egg, have never made any money out of me on thier cards. Infact I make money from them.

I dont see how you can lose with them if you pay your balance off every month and then not spend when you SBT on your anniversary.

YorkshireBoy

muffle wrote:

My understanding is the interest in dispute here was from the balance transfer and not the purchase. He mentioned that lot of interest at the start of the post.

I don't think he will get charged interest on the next statement unless he fails to pay this one in full.

Another e-mail from Egg which failed to properly explain anything.

OP said that he had already done his BT and then during the anniversary period his wife made a purchase.

Because Egg's minimum payments go towards the lowest debt, ie the 0% BT balance, this purchase was attracting interest from the moment she made the purchase until he repaid the full balance back to zero.

In repaying what he thought was his full balance, he forgot/didn't know that the purchase would also attract interest from the last statement before the end of the anniversary period and the date which he made his full payment. He will have seen interest on this statement, but not all of it. Therefore, there will be 10-14 days (or so) of interest appearing on his next statement. This is why Egg et al say you have, say, 46 days interest free on purchases providing you pay your statement in full. What this generally means is that you need to pay two statements in full before you completely irradicate this interest.

daveboy

Put quite simply, read the Terms and Conditions.

Pay attention to any changes to terms and conditions (in other words pay attention to the inbox of the email address you gave them).

Use your feet (so to speak) and bank/borrow elsewhere if you don't like their procedures.

In my opinion there are far worse banks/lenders out there than Egg.

muffle_2

Thanks YB, I admit I mis-read the first paragraph of the OP.

Purchases are only interest-free if paid in full by the due date on the first statement they appear on.

If it's not paid in full, the outstanding amount goes into a pool (separate to balance transfers) where interest is charged daily (as balance transfers and cash advances are in their own pools).

So I think we're both correct here - but the interest was charged not because it was a purchase or otherwise, but because the full balance on the statement was paid 14 days after the statement was issued, and during that time interest was still accruing on a daily basis.

You won't get charged interest on interest unless it's not paid in full, in which case it gets added to the pool. So as YB says it will take 2 statement cycles to clear an unpaid balance in full, unless you overpay by the same or more than the interest accrued since the statement was issued.