Trailing/floating Interest

chilbill42

All,

I have a Barclaycard. I recently made a large purchase on it and made three monthly payments over and above the minimum re-payment amount. On the last two payments I paid also the estimated interest on top of my payment. Lo and behold on the 25th June I got my statement. I assumed it would show I have repaid the amount and my account would be zero.

However, I found a charge of 56 pence for an interest charge. When I rung the Barclay card telephone number I was told this amount was a trailing interest charge as I have failed to make two consequetive full payment. I basically got hit with a load of finance babble and I got in Saturdays post more terms and conditions. The guy at the call centre went into depth how they worked out this charge. I replied so how come theres all this estimated interest stated on the credit card statements and why have they now introduced a new interest working in the background. He said ALL credit cards do this now- but this is the first I have heard of it.

Has anyone else heard of it?

Kind regards

td_007

You might want to go through this thread: http://forums.moneysavingexpert.com/showthread.html?t=1251129

Basically, if interest is due then while the statement shows the calculated interest till the statement, interest will continue to accrue till it is actually paid. For eg. if your statement on the 10th says £100 spend + £5 interest and you pay off £105 on the 20th, trailing interest is calculated for the period between the 10th and 20th and so even if you pay in £105 you will have some interest to pay next month.

normanmark

Trailing interest has been around as long as credit cards have.

Unless you pay the full amount required on the statement by the due date then you'll get interest added from the first day past the due date of that statement.

When you pay off that full amount on the card, that will clear the balance to zero, however interest needs to be calculated up to the day where you make that final payment (Credit card companies cannot predict when you'll make that full payment). So in order to correctly bill you for the interest they have to add this on after you make the final payment.