Is this actually legal?

vandiesel

Hi,
So having checked my Halifax credit card statement (owing almost 10k), I note that last month, the balance was 9950.32. On the 10th may, I made a (minimum) payment of £186.00. On the 17th, there were two interest charges of £22.25 and £169.86.
This month, I note that the balance is now 9956.43 and the minimum payment has gone up to £197.11 . This card is not used for anything other than holding debt while other more pressing debt is paid off (so no additional transactions).

From this, I assume that Halifax are actually charging more in interest than the minimum payments so the on-going account balance is actually increasing, despite paying the minimum amount on-time every month.
I assumed (naively possibly), that if you paid the minimum amount, it was supposed to cover the interest and pay a nominal amount of the capital off. From my statement it would seem that this is not actually happening.
My question is, is what Halifax doing actually legal/following banking rules/etc ? It does seem to be against the whole premise of paying off the minimum amounts.

Cheers, vand.

Tixy

New agreements taken out after March 11 have to ensure that the minimum is the interest plus 1% of the balane. Prior to that there was no such rule. The minimum payment on older account is usually a flat percentage and when people have interest rate hikes it is not uncommon for the interest to be more than the minimum payments.

GT-S5820

Tixy's right - which is why it can be almost impossible to clear CCs by paying the minimum payment only, I know this too well unfortunately for me :-(

burnsy89

The new European Consumer Credit Directive should protect you from this, regardless of when you took the card out - contact the company themselves and ask for a written explanation on how the minimum payment is calculated - whilst your original credit agreement is legally binding, new European laws should override this

CLAPTON

vandiesel wrote: »

Hi,
So having checked my Halifax credit card statement (owing almost 10k), I note that last month, the balance was 9950.32. On the 10th may, I made a (minimum) payment of £186.00. On the 17th, there were two interest charges of £22.25 and £169.86.
This month, I note that the balance is now 9956.43 and the minimum payment has gone up to £197.11 . This card is not used for anything other than holding debt while other more pressing debt is paid off (so no additional transactions).

From this, I assume that Halifax are actually charging more in interest than the minimum payments so the on-going account balance is actually increasing, despite paying the minimum amount on-time every month.
I assumed (naively possibly), that if you paid the minimum amount, it was supposed to cover the interest and pay a nominal amount of the capital off. From my statement it would seem that this is not actually happening.
My question is, is what Halifax doing actually legal/following banking rules/etc ? It does seem to be against the whole premise of paying off the minimum amounts.

Cheers, vand.

now you know the situation you just have to make extra payments each month so the capital decreases each month

chattychappy

burnsy89 wrote: »

The new European Consumer Credit Directive should protect you from this, regardless of when you took the card out - contact the company themselves and ask for a written explanation on how the minimum payment is calculated - whilst your original credit agreement is legally binding, new European laws should override this

I don't think the Directive has anything to do with minimum repayments. That was a home grown thing following consultation by the dept for BIS and inserted into the Lending Code. It doesn't apply to existing accounts though some lenders have chosen to apply it via a change in the T+Cs.

MoneyWasting_Expert

Man thats pretty bad. Paid the Minimum Payment plenty of times and never in my life have I had a card where the minimum does not cover the interest at least. The only time I ran into difficulties, was trying to pay the minimum with a over limit fee of 12 pounds added on. That for me was during times when I had creditors that just had to be paid off soon. Being ripped off by the CC was worth it for one less creditor making noise.

moonrakerz

burnsy89 wrote: »

The new European Consumer Credit Directive should protect you from this, regardless of when you took the card out - contact the company themselves and ask for a written explanation on how the minimum payment is calculated - whilst your original credit agreement is legally binding, new European laws should override this

European Directives are not the same as UK Laws.

Tixy has already answered the question anyway.

KingElvis

That sounds like a crappy deal but I hope you find a way out.

Intoodeep

Absolutely the way things work with cc's, surely people check to see what the estimated interest the following month is going to be, if the following months interest is going to be 200 pounds then obviously paying a minimum payment amount of 190 pounds will result in an increase in the balance.

thenudeone

MoneyWasting_Expert wrote: »

Man thats pretty bad.

If you think it's bad, just pay more.

The statements always show the estimated interest for the next month and what the minimum payment is, so it's pretty easy to see whether the interest will be covered by the minimum payment or not, and make any extra payment.

You have to take some responsibility for the repayment of your debts. Don't blame the banks because YOU decided not to pay any more than the minimum.