When does clearing a balance not actually clear a balance - and why??

poggle99

Hope there are some credit-card users wiser than me that can advise here...

Last month, I paid off my husband's credit card in full, as soon as the statement arrived (the day after the statement date). All that was on it was £7.06 in interest charges relating to the previous month's balance; we usually pay off in full, but were caught out by the statement arriving while we were on holiday (we didn't make a late payment, but we weren't able to get the full balance paid off in time - we made a 'faster payment' for a chunk of it, then paid the rest the day after).

Our statement has arrived toda, and we've been charged a penny interest - for the three days between the £7.06 charge being applied to our account (on 11 September) and my paying it off (on 14 September). This seems to me blatantly unfair - how on earth is one supposed to actually clear a balance if you can be charged interest even when you pay the instant the statement arrives?

This would be merely a minor irritation, were it not for the fact that we transferred a balance to take advantage of a promotional transfer rate, thinking our account was completely clear - so now that penny interest is stuck behind our transferred balance.

Any advice here? Do I have a leg to stand on - any hope of getting them to remove that charge - or do I just have to bail out as fast as I can? We can't afford to pay off the balance right now so it will mean emergency tarting around (sigh).

LeeSouthEast

If you don't always clear the balance in full, it'll take two billing cycles of full payments to 'pay it off'. The first payment clears the balance, the second clears the residual interest accrued.

NickX

One penny trapped behind a Balance Transfer is not really a problem.

The interest on 1p is going to be negligible and shouldn't even appear.

As above this is quite normal when settling a Credit Card in full and is known as "Residual Interest" or "Trailing Interest".

I also think that if you speak to them and say that you were not expecting this, they may well write off the 1p which will make your account look tidier, but all in it really isn't a problem.

simpywimpy

I just had this problem and called them up.

They said, this particular credit card company calculated interest from the first day of the month so by the time you come to pay, you will owe interest on the whole amount regardless of whether you pay it off.

I would therefore give them a call and check if this was the case and make sure that you pay the outstanding bit straight away. A decent firm will then cancel any residual interest so you dont end up always having a tiny excess to pay.

poggle99

Thanks for advice on residual interest - as I say, we usually pay off in full so this one is completely new to me.

The "estimated interest" on our statement for next month is shown as a pound, which was panicking me somewhat (maybe the statement production software can't write anything smaller than a pound...). We're expecting a tight few months so had been planning to pay the transferred balance off in bits up to the end of the promotional rate next May - so I was imagining these pound charges piling up over the months... OK, still not masses, but it would be much better not to have anything stuck there.

Will get my husband to give them a call later (am not named on the account or I'd sort it out myself) and see if there is any hope of them writing it off. It is infuriating as we are usually SO organised about bills.

LeeSouthEast

It's likely £1 is about all it can manage to bring itself to go down to. See what next month comes out at, or phone them and have a chat.

TrickyDicky

poggle99 wrote: »

Will get my husband to give them a call later (am not named on the account or I'd sort it out myself) and see if there is any hope of them writing it off. It is infuriating as we are usually SO organised about bills.

Im surprised you havent set up a DD for the full amount each month - that means you never get trapped while away on holiday unable to pay off a bill.

poggle99

I've been caught out by "accidental" DDs in the past causing us problems, so am a bit paranoid about them... but you're probably right.