Confusion about how Barclaycard interest works

bengal-stripe

curiousgeorge1 wrote: »

What she tells me is that the call center told her that if she doesn't pay off her total balance in full, even if she is 1 pence short, they charge the full interest on the whole amount. So it seems pointless to pay it off at all, unless you can pay the full amount. This just seems like madness to me.

Surely she should change her credit card!

The interest gets calculated on the daily balance.

In this case, after the invoice date, let's say 12 days for a balance of £1514. Then the payment gets booked and it’s interest for £294, 5 days later the new purchase takes it up to £372 etc.

If you don’t want (or cannot) pay the entire balance, pay at the beginning of the cycle (not on, or near the ‘payment due’ date). That keeps the daily balance down, hence less interest.

All credit cards work like that.

curiousgeorge1

Thanks all, but I'm really none the wiser. The previous month, she HAD paid off the entire balance in full (only £106). Then on July 5th she pays £1200 on a large purchase. With some other purchases her balance gets to £1514. She pays £1220 on the 2nd August (that's less than a month after the £1200 purchase). On the 9th of August she is charged £16.94 interest. My only explanation of this is that Barclaycard are giving her absolutely no interest free period on purchases. I know that if I had this exact spending on one of my credit cards, I'd have only paid less than a few pounds of interest. I have at least 45 days on interest free period on my purchases.

Either way, I think she's decided to get a better credit card so even if we've misunderstood the situation, I guess it's moot.

dazza.mk

If she didn't pay the statement off in full she will have paid interest on all purchases (including interest on the £1200 she paid off for the time between the purchase date and teh payment date)

izools

curiousgeorge1 wrote: »

My only explanation of this is that Barclaycard are giving her absolutely no interest free period on purchases

Yes that would be correct because the interest free period only applies if you've cleared two consecutive statements in full not just one.

Same with all credit cards

Jigga

I don’t think that we have fully clarity on exactly what happened here, but from my understanding

1. The June statement was settled in full
2. In July purchases were made on the card of £1,514
3. I assume the July statement came to £1,514?
4. Only £1,200 was paid towards the July statement

It doesn’t work on a purchase by purchase basis, i.e. I’ll pay off the £1,200 item, payments go against monthly statements. So if you don’t pay the monthly statement in full, daily interest accrues from each purchase date for all of the credit (in your case the full £1,514).

As above, this is how it works for all cards, and with an APR of 12%, I don’t think I would be cancelling this card. However, it is up to you in the end.

curiousgeorge1

Okay, so my sister and I have learned a bit about credit cards through this. I was not aware that if you don't pay off your balance in full, then you lose your interest-free period and you are charged interest from the date of any purchase. I was completely unaware of this as I've always paid in full by direct debit. And if my sister understood this, she would have paid in that £1220 much earlier or tried harder to pay in full.

So is this the case for every credit card, is there one that still gives you some interest free period without full payments?

curiousgeorge1

I agree that 12% is a very nice rate!

izools

After any promotional offers, the "51 days interest free" (or thereabouts) period with all cards only applies if you've cleared two statements in full - or in your case - have always settled in full via direct debit.

With an APR of just 12% I'd stay with Barclaycard as that is a very good standard rate and you'll be darn lucky to find better elsewhere!

:beer:

CLAPTON

curiousgeorge1 wrote: »

Okay, so my sister and I have learned a bit about credit cards through this. I was not aware that if you don't pay off your balance in full, then you lose your interest-free period and you are charged interest from the date of any purchase. I was completely unaware of this as I've always paid in full by direct debit. And if my sister understood this, she would have paid in that £1220 much earlier or tried harder to pay in full.

So is this the case for every credit card, is there one that still gives you some interest free period without full payments?

no there isn't any card that does that

Jigga

The only way you can pay a minimum on purchases but not accrue interest is if you have a deal with the card on 0% purchases. These are usually introductory offers when you first get a card with this offer and it is always time limited. Otherwise, no card will do this.