Halifax late payment AND interest charge?

andy1988

Hey guys, just a quick one.

Dad's credit card min. payment was made 2 days late (my mistake not checking statement). But in addition to the £12 fee he was instantly charged £20 interest for the outstanding debt. This is very strange as the debt is only £1,400 (16% APR) and it had only been due 8 days before the interest was charged (so the interest should have been around £6.00).

To elaborate:
Purchase made 8th December
Relevant statement issued 12th December, payment due 4th January
£50 min. payment cleared late - 6th January
2nd statement issued 12th January charging £20 interest + £12 fee

My only theory is that if a payment is made late they charge interest from the day the purchase was made (making £20 interest accurate), but this isn't in their T&C's and seems odd, any ideas? Called them but they will only speak to my dad, going to have to call them back next week but I'd like to know where I stand if anyone can advise.

Thanks,
Andrew

Hax

Sorry - I'm not following what the problem is here...

Your father has a credit card with £1400 on it. You pay interest on that balance unless you clear the balance in full every month. As you only paid £50 (minimum payment) you clearly haven't paid the full balance and therefore don't qualify for the interest been waived.

£20 interest sounds about right for £1400 @ 16% APR

andy1988

Hi,

The £1,400 was only put onto the card on 4th December, and interest isn't payable at all if the balance is cleared in full on the due date (4th January), as credit cards come with "up to 56 days interest free". So my confusion is over the charge of a full months interest when, after the "interest free period" the debt was only outstanding for 8 days.

My conclusion is if you breach the T&C's regarding on-time payment, the "interest free peroid" is void and interest is charged from "day 1" of the credit card purchase? But I want to be sure of this for any potential issues in future, as if this were applied to a credit card with 12 months interest free, and in the 11th month the user made one late payment they could be in for an astonishing interest charge.

Other than the £1,400 purchase the card hasn't been used for months so it had no pre-existing balance.

Thanks,
Andrew

YorkshireBoy

andy1988 wrote: »

...this isn't in their T&C's

http://www.halifax.co.uk/creditcards/conditions_7728.asp

See condition 3.5 (and condition 3.6 explains the residual interest that will be charged next month)

YorkshireBoy

andy1988 wrote: »

if this were applied to a credit card with 12 months interest free, and in the 11th month the user made one late payment they could be in for an astonishing interest charge.

That's not correct.

They'd be charged only for the period between month 11 and when it was settled...maybe only a few days.

Remember, it's not like buy-now-pay-later in that credit cards do not have 'deferred interest'.

andy1988

Am I right to believe if you don't pay a card off in full on the due date, all your purchases will be charged at the given interest rate starting on the day you made the purchase? Meaning even if you pay the minimum on time, but you leave £1,000 on your card for just one day past the due date you'd potentially pay around £14 interest?

andy1988

Thanks YorkshireBoy, I read that page but missed 3.5, was scanning for "late payment". That clarifies the issue so thanks very much...but that also means on the said 12 month interest free card, if you let the balance remain on the card after the 12 months you'd have to pay interest all the way back to the day you made each purchase? Or does the technicality of "0% APR bonus" mean that's not true?

I just want to be clear on this as it could be a costly mistake.

YorkshireBoy

andy1988 wrote: »

Am I right to believe if you don't pay a card off in full on the due date, all your purchases will be charged at the given interest rate starting on the day you made the purchase? Meaning even if you pay the minimum on time, but you leave £1,000 on your card for just one day past the due date you'd potentially pay around £14 interest?

Purchase interest accrues daily on the account (in the background). Only if you pay in full by the due date do they waive this purchase interest.

Did you read condition 3.5?

YorkshireBoy

andy1988 wrote: »

but that also means on the said 12 month interest free card, if you let the balance remain on the card after the 12 months you'd have to pay interest all the way back to the day you made each purchase?

I've already said that's incorrect in my earlier post. Credit cards do not operate with 'deferred interest'.

Or does the technicality of "0% APR bonus" mean that's not true?

You've mis-quoted there. You'll never see "0% APR" quoted for a credit card as they aren't allowed to do so. They'll say "0% interest"...a small, but important, difference.

I just want to be clear on this

Read the replies you've had again.

andy1988

Thanks again, much appreciated. Just wanted to ask same question two ways as from experience minor differences can result in different outcomes.

Cheers,
Andy

YorkshireBoy

andy1988 wrote: »

Dad's credit card min. payment was made 2 days late (my mistake not checking statement).

There's obviously a very good reason why he doesn't look after his own financial affairs, but to save any future arguments why not consider using direct debit?