MBNA Virgin Atlantic Card - extortion???????

Mommy_Dearest

I'm hoping that somebody can help me understand what has just happened. I got this card to put loyalty points on the Virgin Flying Club. The interest rate's high (17.9% APR) but the plan is to repay each month in full. I made a stupid mistake last month, and inadvertently paid the total on the front page of the statement, not taking the time to check it properly and not realising that there werw a few more entries on the back! So I paid about £500 instead of the £715 that was actually due.

However, when I paid this month's in full, I realsied that I'd been charged nearly £32 in interest for a £207 debt, for less than a month!! I called them, to be told that because I hadn't paid in full last month, the interest was charged on the whole amount, i.e. the £715. I was told this is in the Terms and Conditions - which I can't find....not even on their website. I couldn't get our heads round the calculation. If that total debt were left for a year the annual charge would only be about £128, surely?

I'm not good at figures - clearly - but can somebody please help me to understand how an outstanding debt of about £200 for less than a month could have cost me £32??????

INT1

I can see the calculation you have used but believe it to be wrong. Your interest charge for the whole year would be approx £410.

I am only going off the basis that inthe past I have had about a £500 balance on a card and the interest was £20 odd so times this by 12 and also don't forget they will charge you interest on the interest that is added aswell.

It's how they make their money

bunny999

They charge you interest on the whole amount from the day of purchase (not the statement date or the date payment is due). This is standard practice.

Moggles_2

If your payment falls short of the statement balance, it's treated as a partial payment.

As a result, the interest-free grace period normally allowed on purchases is cancelled on all transactions that month, so interest on the whole balance, calculated daily, is being added to your account from the date of each transaction.

I would stop using the card, if you haven't already, and pay off the full balance including any transactions posted to your account since your last statement ASAP.

Mommy_Dearest

Thanks to everyone who replied to my post.....I'll get the calculator out and see if I can reconcile the charges, but at the most the debt was only two months old....its just a shame that these companies don't illustrate their Ts & Cs with worked examples!!

Eric_Pisch

they like to burry them deep so that you fall over there traps

spot the £100 a year fee for this one after the first year, it is way down in the list and very easy to miss, when we got on it was buried in the T&C ...

http://www.virgin-atlantic.com/en/gb/creditcard/blackcard/index.jsp

chattychappy

Mommy_Dearest wrote: »

but can somebody please help me to understand how an outstanding debt of about £200 for less than a month could have cost me £32??????

As pointed out, the interest wasn't applied to the outstanding debt of about £200 for less than a month. It started running on the date of transaction for all the transactions for that month. So at one point it was being applied to £715. After your part payment was received, it was then applied to the remaining balance, as per your comment above. It can often take a couple of statement cycles to eliminate the interest charge completely (eg because of interest on interest), but the charge will be much smaller on the next bill.

nomoneytoday

It could be correct, but would depend on other spending, and when the transactions hit the account.

17.9% APR is roughly 1.4% a month (rounded up slightly).
£715 x 1.4% is £10 a month, giving month 1 interest figure of between £10 and £20. Using a mid point gives £15. The exact date and amount would vary this, as would compound interest etc.

Add on this months spending of £1000 gives another £14 interest.

£15 plus £14 is £29, so looks close to the £32 charged.

If the original transaction is slightly older, or this months spend slightly higher this will move the £29 to £32

marksoton

Eric_Pisch wrote: »

they like to burry them deep so that you fall over there traps

spot the £100 a year fee for this one after the first year, it is way down in the list and very easy to miss, when we got on it was buried in the T&C ...

http://www.virgin-atlantic.com/en/gb/creditcard/blackcard/index.jsp

Its £115 and is chargeable in your first statement.

Eric_Pisch

marksoton wrote: »

Its £115 and is chargeable in your first statement.

maybe now, when we had them there was no mention of it and it was not applied in the first year then boom on the cards first anniversary, had to get someone to read the T&C as it was printed so small and buried so deep even Poirot would have had trouble tracking it down ..

oxmatt

I don't think that is entirely fair - regarding the card fee. It is pretty clear that the black card has a fee and you earn twice as many miles per £1 as the white card which has no fee.