Capital One Credit Card - unusual interest charges

nic23

Can anyone shed more light on my issue and confirm whether this practice is usual...

My boyfriend has a capital one credit card owing to his poor credit rating from his irresponsible behaviour with money in the past.
His November statement requested £369.54 with a minimum payment of £5.00 by the 8th of Dec. He paid £369.00 before the 8th of Dec by debit card His December statement now shows an interest charge of £9.38 (this is derived from 2.54% of £369.54). He called capital one who say that this is correct because he has not paid the full balance (£0.54 was not paid). I completely agree that interest should be charged on the outstanding 54p but how can they justify charging interest on money (£369) that has been re-paid??

Is this common practice as I can't see anything which explains or defines this point in the small print. My credit card (HSBC) appears to only charge interest on the remaining unpaid balance when I haven't paid the balance off in full.

I realise that credit card companies are in business to make money but this practice seems a little illogical given that only 54 pence was outstanding i.e. on loan.

Many thanks in advance for any comments regarding this.

mikeprice

So your boyfriend has mismanaged money in the past by spending other people's money and even now he's still spending other people's money by not repaying his credit card borrowings?

As you say, it is "irresponsible behaviour".

I think it's perfectly valid for charges to be made if he has not repaid the full balance amount. How much less it was is besides the point.

sharpy2010

Or, to word it somewhat more tactfully, yes its correct, and its been done this way for more than 15 years. Whether or not its acceptable is another matter, but its correct.

clairbear1000

But the reason is interest is charged from the day the spend hits the account. If the full balance is paid then the interest is waived, however as it was underpaid he was charged interest on the 369.54 from the date spent until 369 was paid then interest on the 0.54 until the next statement was sent.

The amount of interest depends on the date you made the payment.

cse

To give a more detailed response, the payment of £369 would probably have been made about 25 days into the cycle. Capital One have charged interest on the full balance for the 25 days where the full balance was still outstanding on the card, and on the few pence remaining for the rest of the statement period. Unfortunately this is completely standard practice

EDIT: what clairbear said

jd2010

Im with capital one, best advice I can give is to Cut it up!!!

kev.s

so he paid the who;e amount but 54p? why?

hayton2k3

jd2010 wrote: »

Im with capital one, best advice I can give is to Cut it up!!!

that is your advise on atleast 2 cap one threads now.
Do your self a favour, Don't apply for silly interest cards if your going to complain about it.
Cut you card up before you have problems paying it off causing more problems for other people

opinions4u

nic23 wrote: »

His November statement requested £369.54 with a minimum payment of £5.00 by the 8th of Dec. He paid £369.00 before the 8th of Dec by debit card His December statement now shows an interest charge of £9.38 (this is derived from 2.54% of £369.54). He called capital one who say that this is correct because he has not paid the full balance (£0.54 was not paid). I completely agree that interest should be charged on the outstanding 54p but how can they justify charging interest on money (£369) that has been re-paid??

Because it was outstanding for a period of time. They waive the interest if the account is cleared in full. They charge it if the account is left with a balance, however small.

Is this common practice

On every credit card I've ever had. Yes.

as I can't see anything which explains or defines this point in the small print. My credit card (HSBC) appears to only charge interest on the remaining unpaid balance when I haven't paid the balance off in full.

They will charge interest daily on whatever's outstanding until it is cleared. If that's £369.54 for 24 days and 54p for the next month, then so be it.

I realise that credit card companies are in business to make money but this practice seems a little illogical given that only 54 pence was outstanding i.e. on loan.

It depends how you view things. If the money had been borrowed on an overdraft, he'd have paid interest on it. Why should a credit card be any different?

Your other half needs to change his outlook as a result of this.

1) If in doubt, always round up in the way that is least favourable. Pay more if a bill is due, never pay less. Estimating an expense - err on the side of caution and plan for the worst. Not just for credit cards, but for everything. Estimate and add 10% on. At least!

2) Why would you leave a balance of 54p outstanding? Just never do it again. It's madness. Take it as a lesson learned - it's only cost a tenner, but it really is a bizarre thing to do.

alfred64

The op must be a wind-up.
I note the number of posts = 1.
And who would pay £369 off a credit card to leave a balance of 54p?

Merry Christmas -because it is that and not April 1st.