Overlimit charges - on direct debit

on2awinner

Afternoon all,

I've got a Virgin card, £4,200 limit which i've been paying via direct debit since i got it back in 2002. I have been a bit slack and as it's all based online, i've not been keeping up to date with checking my statements monthly, and have done this morning. Since July 09, i crept over my limit, by £9.02. They charged me their default of £12, which i have no argument with. The problem i have is that the direct debit then took the usual minimum out, but the interest earned in that period then took me back over my limit. I haven't used it since, i have been paying via direct debit and thinking everything was ticking over ok. But for the last 6 months the same thing has been happening, i.e. the direct debit takes out the minimum which isn't enough to get me back under my limit....so they have charged me £12 extra per month since. Surely if i have a minimum payment DD set up, they should take whatever they need to get my account back into line?

Has anyone else had any experience with this? I plan to call Monday morning but just wondered if anyone could offer some advice beforehand. I want the £12 per month given back, because as far as i was aware everything was fine.

James

td_007

Minimum payment is not designed to get to under your credit limit but to ensure that you pay off a certain percentage of the balance (even if it is over credit limit). Unfortunately, there is little you can argue here. If you have not used your card since July 09 when it was first time you went overlimit, you can request a goodwill gesture for refund, saying that you inadvertently went overlimit but as a dd was setup you were not following the payments closely. It is a long shot but worth a try given the circumstances. You might have more success writing in.

izools

£12 per month since July? Ouch.

First of, I wouldn't expect you to get that back without a fierce battle. They will argue you should have kept a closer eye on the account.

As td_007 sais, the direct debit is designed to cover next months interest and a marginal amount more, but does not include overlimit and default sums so in your situation will not prevent the same thing happening again.

The method used for calculating minimum payments is clearly explained on the original credit agreement and any statement you have had through the post before.

I would recommend asking Virgin to close the account, re-instate paper statements, and pay a lump sum to the account to avoid further charges.

Closing the account prevents the interest rate from being arbitrarily hiked (which may well happen to you given the multiple overlimit charges) and of course takes away the temptation from using a credit card that, excuse me for saying so, you seem not to be able to afford.

ElkyElky

Why on earth didn't you make it a chore to check the online banking websites regularly?

on2awinner

cheers guys pretty much what I thought, will see what they say on Monday.

And i didn't check my online banking because i've been hammering my other card with overpayments, as the virgin interest rate i have is fairly low in comparison. So made the (silly) assumption that as i thought things were rosy and i weren't getting any letters telling me otherwise, that all was good. Lesson learnt :-/

izools

As you say, lesson learned, and a clear way forward.

> Close the account
> Reinstate paper statements
> Make one time payment of about two or three times your monthly interest

Might be better to set up a standing order for a fixed monthly amount instead of DD, as the DD will go down as the balance does and never clear the balance.

hattiefats

I did this too. Got one month charge back and then did a bigger payment to clear interest and then set up standing order.
I was mortified but it was because I never checked the account and just assumed all was ok. I understand interest rates etc on cc a lot better now!
Good luck.

izools

TIP - If you set up a standing order, it is best to do it to reach the account smack in the middle of the due day -

So if the bill falls due on the 21st, set it up for the 21st - 2 - 15 = 4th of each month.

This way the payment will hit the account smack in the middle of the billing period, rendering it impossible for you to inadvertently pay twice one month and not all the next - as too many people seem to!

NickX

izools wrote: »

TIP - If you set up a standing order, it is best to do it to reach the account smack in the middle of the due day -

So if the bill falls due on the 21st, set it up for the 21st - 2 - 15 = 4th of each month.

This way the payment will hit the account smack in the middle of the billing period, rendering it impossible for you to inadvertently pay twice one month and not all the next - as too many people seem to!

Another TIP for Standing Orders : Always make sure that they cover the Minimum Payment. People have been caught out by increasing the debt on the card, but not increasing the Standing Order which has become less than the Minimum, theyby incurring penalty charges.

oscar52

izools wrote: »

TIP - If you set up a standing order, it is best to do it to reach the account smack in the middle of the due day -

So if the bill falls due on the 21st, set it up for the 21st - 2 - 15 = 4th of each month.

This way the payment will hit the account smack in the middle of the billing period, rendering it impossible for you to inadvertently pay twice one month and not all the next - as too many people seem to!

I would have to check to be sure - but that calculation (to me as an MBNA employee) would indicate the statement cycle. MBNA have very short payment periods between cycle and due date - 16-18 days IIRC.


Also OP, if you have no luck on the phone re charges, just use a search engine for Customer Advocates Office and write to reclaim them - they will say no first, but refund if you send a second letter.