Extortionate Cash Interest

keelo

I just wanted to ask a quick question about cash interest on a credit card. I cleared my balance last month and then had £2.05 added after I had made payment. I paid that and asked when I took out cash as I haven't used the card for 2 years. They told me I took out £20 in August 2006! I don't have all of my statements but based on the ones I can access online I think I have paid at least £144 in interest for that £20 4 years ago! I cannot believe that is legal! Just wondering if anyone knows about this as it seems extortionate!
Thanks

zppp

keelo wrote: »

I just wanted to ask a quick question about cash interest on a credit card. I cleared my balance last month and then had £2.05 added after I had made payment. I paid that and asked when I took out cash as I haven't used the card for 2 years. They told me I took out £20 in August 2006! I don't have all of my statements but based on the ones I can access online I think I have paid at least £144 in interest for that £20 4 years ago! I cannot believe that is legal! Just wondering if anyone knows about this as it seems extortionate!
Thanks

Yes it is legal and no you cannot reclaim it.

Premier_2

keelo wrote: »

...I think I have paid at least £144 in interest for that £20 4 years ago! ...

Unlikely.

Credit card rates are high, especially for cash advances, but typically they are about 30% (perhaps 40% back in 2006)

I doubt you've even paid £34 interest over the past 4 years on that money you borrowed, let alone £144.
Any extra would be a result of other purchases and/or default fees

keelo

Premier wrote: »

Unlikely.

Credit card rates are high, especially for cash advances, but typically they are about 30% (perhaps 40% back in 2006)

I doubt you've even paid £34 interest over the past 4 years on that money you borrowed, let alone £144.
Any extra would be a result of other purchases and/or default fees

Well at £2.80 per month for 48 months it comes in at £134.40 but I must have paid more than £2.80 per month 4 years ago!

keelo

Statement from April 2010:
28 Mar Payment Received -- Thank You 100.00
04 Apr Purchase Interest on 4 Apr 25.81
04 Apr Cash Interest on 4 Apr 2.80
And August 2010:
18 Jul Payment Received -- Thank You 100.00
04 Aug Purchase Interest on 4 Aug 18.68
04 Aug Cash Interest on 4 Aug 2.78

dunstonh

I cannot believe that is legal! Just wondering if anyone knows about this as it seems extortionate!

Its legal (I think you were perhaps thinking lawful/unlawful when you typed legal - however its lawful as well). Its also about right. Credit cards are not designed for long term borrowing and cash advances are really an emergency option. Not quite as expensive as pay day loans but really designed to be paid off pretty quickly.

bengal-stripe

keelo wrote: »

I cleared my balance last month and then had £2.05 added after I had made payment.

That was the interest for the time between statement date and the actual date your payment was credited to your account.

You obviously hadn't cleared your balance the month before.

Premier_2

keelo wrote: »

Well at £2.80 per month for 48 months it comes in at £134.40 but I must have paid more than £2.80 per month 4 years ago!

keelo wrote: »

Statement from April 2010:
28 Mar Payment Received -- Thank You 100.00
04 Apr Purchase Interest on 4 Apr 25.81
04 Apr Cash Interest on 4 Apr 2.80
And August 2010:
18 Jul Payment Received -- Thank You 100.00
04 Aug Purchase Interest on 4 Aug 18.68
04 Aug Cash Interest on 4 Aug 2.78

As I said, interest on cash advances is typically charged at about 30% (or maybe 40% in 2006).
Check your current statement - it probably specifies the actual rate. If you are being charged £2.80 per month then:
1. You have borrowed more than £20 in cash
2. You have a very high interest rate (tell us the company & rate, and switch to a better deal)
3. An error has been made.

Contact your card company if necessary to clarify.