Huge penalty for not clearing M&S Money balance

johnnyprboy

We are lucky that we can afford to clear our credit card balance every month. Last month, however, we forgot to pass on an expenses payment I received from work which meant our balance was underpaid by about £330. We noticed a huge interest charge this month, so queried this with the contact centre. The agent was clueless and said she would investigate and write to me. I pointed out that their system should be able to show exactly how the interest charged was calculated. She was unable to help, so I made it clear that I would not end the call until the matter was resolved and that I wanted to speak with a supervisor.

I spoke with M&S in Chester and could not believe the explanation: If you do not clear your balance from a previous bill, you "lose your right to the 56 day interest free period", and interest is then applied to the WHOLE of the previous balance and all transactions on the current bill also. Let me be clear - I missed a payment of £330, so they charged me interest on £5649!

She then tried to make me feel ungrateful because "56 days interest free is a big deal". I pointed out that is the whole concept of a 'credit card' and that, even though this rule is apparently (as she told me) in the Terms and Conditions, its seems wholly unfair and legally questionable. I confess I got quite angry.

I pointed out that we had been with M&S for years, but that if she applied that T&C I would consider it a 'deal breaker' and close my account. Given they make around £1,000 each year in transaction charges from my account, there was no surprise that she waived the £117 interest on this occasion.

She told me that she believed all credit cards applied this system. If that is the case, then I can feel a Money Saving Expert Campaign in the making!

The point of this post: a warning to others and a call for taking a firm stand with card issuers that try to apply this ridiculous rule.

mjm3346

Standard across just about every single card and posted on here many times.

[Deleted User]

Yup - you borrowed the money for a month, and they charged you a month's interest. It's how credit cards work.

Fruit_and_Nut_Case

johnnyprboy wrote: »

She told me that she believed all credit cards applied this system.

Yup. You'll know next time.

BTW Welcome to the forum.

the_insider

How do you think the interest is applied to accounts where customer's aren't in a position to pay the full balance each month? Or choose not to for whatever reason? The way interest is calculated is on the back of every statement so really there is no excuse for ignorance in this case.

I must admit that this post makes you sound a little pompous but I'm pleased that shouting at the manager got you your £117 back.

CLAPTON

yes

they charge interest from the day you spend the money to the day you pay it back; just like a mortgage or a loan
however as a special offer, if and only if you repay in FULL every month the interest is waived and the 'up to 56' day interest free period is applied

ViolaLass

Deleted_User wrote: »

Yup - you borrowed the money for a month, and they charged you a month's interest. It's how credit cards work.

But she paid most of it back in time so why was she charged interest on the whole amount?

I'm concerned mostly because I didn't know this - not a prob as I pay my bills in full every month but my MIL doesn't.

[Deleted User]

Because she borrowed it for a month and only paid part of it back. The deal isn't that they don't charge interest on the bits you pay back. It only applies if you clear the whole balance.

Rupert_Bear

the_insider wrote: »

How do you think the interest is applied to accounts where customer's aren't in a position to pay the full balance each month? Or choose not to for whatever reason? The way interest is calculated is on the back of every statement so really there is no excuse for ignorance in this case.

I must admit that this post makes you sound a little pompous but I'm pleased that shouting at the manager got you your £117 back.

No doubt the poor customer advisor had all the ear ache because the op could not be BOTHERED to read the terms and conditions.
Then the op starting throwing their toys out of their pram so the manager refunded £117.

The charges should not have been refunded as it is not fair on other customers who abide by the t and c's.

We can all plead ignorant.

fozmcfc

Agreed with everyone else regards the way the interest works etc...

BUT as far as the £117 refund, if the OP is a good customer, then it will be a gesture of goodwill and I see no problem with that whatsoever. Having said that if someone had got angry with me, I probably wouldn't have shown the gesture, well not that one anyhow lol.

redpete

johnnyprboy wrote: »

She then tried to make me feel ungrateful because "56 days interest free is a big deal". I pointed out that is the whole concept of a 'credit card' and that, even though this rule is apparently (as she told me) in the Terms and Conditions, its seems wholly unfair and legally questionable. I confess I got quite angry.

The concept of a credit card is that you borrow money for what might be a short time but may be longer. Under certain conditions you are excused the interest.

I pointed out that we had been with M&S for years, but that if she applied that T&C I would consider it a 'deal breaker' and close my account.

If you apply that condition to every card you might want then prepare to find it difficult to find one at all.

She told me that she believed all credit cards applied this system. If that is the case, then I can feel a Money Saving Expert Campaign in the making!

It hasn't happened yet and there are plenty of people who understand the Ts&Cs that CC companies operate.

I pointed out that we had been with M&S for years, but that if she applied that T&C I would consider it a 'deal breaker' and close my account. Given they make around £1,000 each year in transaction charges from my account, there was no surprise that she waived the £117 interest on this occasion.

You would probably have got the same result if you had explained calmly that you had never come across this situation before and were not aware of how interest is applied. This would have been less stressful for you and the unfortunate M&S staff who had to put up with you getting angry with them.