I don't think I should be charged interest, but I am

gafffe

So I think I shouldn't be charged interest on my card because I pay the full outstanding balance every month, but my CC company is still charging me. My question is who is right? Here are all the facts and figures: I hope this is brief enough not to bore you to death and makes sense…

I've got a Capital One card that I use for my daily spend. Their statement date is the 2nd of every month and the payment due date is the 28th of that same month. They have a 56-day interest-free period.

I always pay the balance in full, every month and without fail, on the day I get my salary paid, which is the last working day of the month. In the middle of the month, after the statement of the 2nd has come through, I top the account up with the minimum payment of £5 (so they don't charge me a late fee on the 28th). I never make a cash withdrawal on the card.

So how come they've been charging interest for the past 4 months? This is the question I wrote them. They came back with this:

your purchases have an interest free period of up to 56 days, if you repay your full balance before the payment due date on your statement each month. If your full payment doesn't reach your account by that date, we charge you interest. On checking your account from September 2009, I notice that we are receiving your minimum payments within the payment due date. However, the additional payments are being made after the payment due date. As the payments made are less than your full balance, purchase interest is being charged. Therefore, to avoid the purchase interest from being added to your account, ensure that you pay the complete balance by the payment due date.

I don't think I quite understand the response. The "56 days" bit throws me - I don't think I should be charged interest if I'm paying things off a maximum of 32-ish days since the transaction. Who is right?

Thanks!

nzseries1

Note it says "up to 56 days".

If your statement date is the 2nd, and you purchase something on 3 November, then that transaction will appear on your statement dated 2 December, and you will have until 28 December to pay it. The difference between 28 Dec and 3 Nov is 56 days.

If you purchase something on 1 December, then that transaction will also appear on your statement dated 2 December, and again you will have until 28 December to pay it. The difference between 28 Dec and 1 Dec is 27 days. That's where the "up to 56 days" comes in - you don't necessarily have 56 days from 1 Dec to pay for your purchase interest free.

Unfortunately, by making the full payment after the 28 Dec, you will be charged interest, because to be interest free you have to make the full payment before the due date.

I hope you can understand what I've put - it's not easy to explain! It's like a sale in a store advertising "Up to 75% off everything!!!!!" This doesn't mean that every single thing is 75% off - what that means is that one item in the store is 75% off, and everything else is, say, 5-10% off.

Rob71

gafffe wrote: »

I've got a Capital One card that I use for my daily spend. Their statement date is the 2nd of every month and the payment due date is the 28th of that same month. They have a 56-day interest-free period.

I always pay the balance in full, every month and without fail, on the day I get my salary paid, which is the last working day of the month.

The last working of each month:

• Sep: 30th
• Oct: 30th
• Nov: 30th
• Dec: 31st

...but your payments are required (and have to be cleared) by the 28th -That's why you're getting charged. In terms of who's right and who's wrong, the bank is in the right, even though it doesn't seem fair if you're clearing the balance each month... rules is rules.

I don't know if this is possible, but have you tried to move your statement/payment date so that payments are due on the (say) 3rd of each month? Like that you can clear the account in full each month without incurring charges.

financial_warrior

Like everyone's being saying, the 56 days starts the day after your last statement was generated (not when the current statement was generated) and ends on the day payment is due.

gafffe

It makes a lot more sense now - thanks! I guess I'll just ditch this card and switch to another one I've got that has a better-suited schedule for me.

sharpy2010

gafffe wrote: »

It makes a lot more sense now - thanks! I guess I'll just ditch this card and switch to another one I've got that has a better-suited schedule for me.

Edited: Sorry, I didn't read your response correctly

Degenerate

gafffe wrote: »

It makes a lot more sense now - thanks! I guess I'll just ditch this card and switch to another one I've got that has a better-suited schedule for me.

Most providers will allow you to move the statement date if you ask nicely.

td_007

gafffe wrote: »

It makes a lot more sense now - thanks! I guess I'll just ditch this card and switch to another one I've got that has a better-suited schedule for me.

All cards work with this general principle. The key is to remember to pay by the "payment due" date - when you made a purchase is irrelevant (some purchases may get the full 56 days credit other may not). If your payment due date falls before your salary date and you do not have money to pay, then you can request the payment due date to be moved - many will oblige.

stfc

All CC providers should change the cycle date following a phone call. If you get a new card from another issuer you may still face the same problem.

cos_2

I'd just like to say thanks to the OP for clearly stating both his problem and details of his account, and to the really helpful people who gave good explanations of why he was being charged.

It's a great example of how helpful this site can be. :beer: