Interest on whole balance not just outstanding balance

Lindyb

As someone who pays off their credit card each month this is not something I am used to. Last month I made a mistake and paid the bill for the month before and therefore was about £250 short. My mistake and I expect to pay interest but for that slip up they want to charge £50. When I queried it with M and S they said it was industry policy and I was paying interest on the whole outstanding amount - from which bill I am not sure? Is this true?

Buzby

Yes, it's aother manipulation of interest rates to make the card profitable to them. The interest on the full balance outstanding is invariably charged until the balance is clear. This is the quid-pro-quo for getting X number of days interest free - just woe-betide you if you don't clear it off!

dzug1

Yes it's industry standard

It does sound a lot though and it doesn't sound like the whole explanation.

chattychappy

Yep, interest is calculated from the date of each transaction until payment is received. Only if you pay in full is it not applied.

Can seem harsh if you only pay a little short of the full balance and then clobbered. On the other hand, its best to think of the "up to 56 days interest free" as a bit of a concession. After all. you are taking credit.

See https://forums.moneysavingexpert.com/discussion/3808275, and in particular my example at post 10.