Interest rate taking me over credit limit each month

bionic_dad

Hi all

This may sound a bit "cake and eat it too" or just ignorance on my part maybe but I have a credit card with Nat West and last year they reduced the credit limit from £4k down to £3200. For the last 6 months or so ive been paying the minimum payment on the balance which is about £3100 but when they add the interest it takes me over my credit limit. I am not using the card and just making the minimum payments.
I rang them and asked if they could raise the limit then i would not keep defaulting as I am being charged £12 each time and some ridiculous interest rate. They wouldnt raise the limit they just said I would have to increase my payments.
I dont suppose it counts for anything these days but I have had this account since 1988.

Am I just a victim of my own stupidity and ignorance or are they at fault for calculating the minimum payment not considering the interest?

Your thoughts no matter how daft they may make me look would be much appreciated - thanks in advance as always

pqrdef

If you're under the limit, and you make the minimum payment, that will leave enough headroom for next month's interest.

To have gone over the limit in the first place, you must have done some more spending or collected late fees. In which case you need to catch up.

chanz4

How much is it always taking over by? You need to increase your payments by this for a couple of months

redpete

bionic_dad wrote: »

...are they at fault for calculating the minimum payment not considering the interest?

They do not prevent you paying slightly over the minimum to ensure you avoid this situation, so not their fault.

dunstonh

I rang them and asked if they could raise the limit then i would not keep defaulting as I am being charged £12 each time and some ridiculous interest rate. They wouldnt raise the limit they just said I would have to increase my payments.

Logical answer and you and see why. You would just spend the increased limit and find yourself in a worse position.

I am not using the card and just making the minimum payments.

as already said above, that is not correct. The minimum payment would reduce your balance and cover interest (albeit slowly)

I dont suppose it counts for anything these days but I have had this account since 1988.

Being with them a long time and running your account poorly does you no favours.

thenudeone

IIRC, regulations mean that the minimum payment will always cover the estimated interest plus a small part of the remaining balance, so as long as you aren't spending any more, the interest will never take you over the limit unless you were over the limit anyway.
If you continue to spend on the card, the interest will of course be more than estimated because the balance is higher.

Snowedunder

Might I suggest that it is the late fees that keep pushing you 'over the limit'?

chattychappy

The OP said he wasn't using the card anymore.

As I understand it, the regs should ensure that if you pay the minimum then the balance will come down. Typically it's interest + fees/charges + a bit.

I wonder if because it's an old card, it's pre-regs. Else it doesn't seem right.

opinions4u

Pay more.

Pay earlier (this will reduce your interest charge).

Don't pay late.

Clear any charges in addition to your minimum payment.

Pay at least £1 a month more than the minimum payment anyway. You're more likely to get accepted for lower rate credit elsewhere in future.

blacksta

I suspect it is the £12 charge that is taking you over the limit. you will need to pay your minimum + charge next time

elantan

why are you not paying more than the minimum? if you know it is going to land you with charges every month why have you not dealt with it ?