Do Capital One cards work differently to others?

pheonixrising21

Its my understanding that (and I may be wrong on this) with credit card purchases you usually get (up to) about 6 weeks interest free, i.e. until the payment due date of the bill after the purchase?

A bit of background..., In May I did a BT of just voer £600 to my new CapOne card (0% for 6 months). I then paid off over £100 at the end of May (after my first bill, min payment was about £6) and similar at the end of June, again straight after I got the bill (min payment about £5). I then made a purchase in early July, about 6th and another around 18th July. I was not expecting any interest on the bill at the end of July, but I have been charged £1.25 in purchase interest. My statement date is around 27th of the month with payment due 21st month following.

Was I right in assuming that I should not have been charged purchase interest on this bill, and that if I made a payment which would cover the minimum payment and the purchases, I should never be charged any interest on said purchases?

I have called Capital One and they are refunding the interest "as a guesture of goodwill". Is this genuine goodwill (i.e. they were right to charge the interest and are doing me a favour), or are they actually wrong? The person on the phone did not seem to understand that this was the first bill I had received since I made the purchases.

Could the fact that I have a BT on the card affect this in any way?

At the end of the day, its only £1.25 and its been refunded, but it sort of makes a mockery of the "make purchases and pay in full when the bill comes to avoid interest" recommendations which is on this site alot!

izools

Unfortunately it seems you've misunderstood how it works.

Capital one is no different to other credit cards.

You'll find the clause is worded along the lines of

"Up to 56 days interest free on purchases when your statement balance is cleared in full and on time".

If you did a £1,000 balance transfer and £500 of purchases, you'd need to pay £1,500 bringing the balance to £0 to benefit from 56 days interest free on purchases.

The condition to getting interest free on purchases is to clear the statement balance, not the purchase balance

pheonixrising21 wrote: »

"make purchases and pay in full when the bill comes to avoid interest"

Yes quite but you didn't pay the bill in full, did you? What was the statement balance, and how much did you pay?

CLAPTON

the rule is you pay no interest only if you pay your bill in full and on time.

you didn't pay the full bill.

do not mix a 0% BT with purchases (unless they are 0% for the same length of time as the BT).

pheonixrising21

Thanks for pointing out the difference between paying of the purchase balance and the full balance, that may explain it.

However, I have only just received the statement, its not actually due until 21st August. Does that make a difference? I've not had a statement to pay in full since the purchases (before this one). I've not had chance to clear the statement balance in full as I haven't yet made a payment since the purchases, its not due until 21st August.

sharpy2010

The interest is correct, it was a genuine "gesture of goodwill" (in other words, a way for the telephone operative to get you off the phone more quickly!).

pheonixrising21

You say its correct but don't say why you think this?

I understand the fact that if I don't pay down the full balance I am liable for all the interest on purchases. I understand that and thats fine, but surely that should go onto the next bill, once I have had the chance to pay off this bill in full and decided not to. But the fact is that I have not had the chance to pay the statement balance before being charged interest. The statement is not due to be paid til 21st August.

Is it because my balance was not £0 from the previous month? It can't be that either (surely?), because everyone who uses cards regularly always has a balance on their statement. For example, you spend £50 on a new card (no BT), statement comes and it says £50, you pay it all, spend again £50 the next month, statement comes, says £50, you pay it, etc, etc. The statements always have a balance

I'm not trying to get out of paying interest I am genuinely liable for. I just want to make sure I am charged correctly and that I understand the process in furture so I can minimise any interest that is due.

Now that I understand the "interest free" bit applies only if I pay off the full statement balance, I fully expect some interest next month as I am not in a position to pay off all the balance. However, I will be able to pay off enough to cover the purchases and about £100 extra, maybe more.

CLAPTON

my understanding is that if you don't pay the balance in full one monthe then interest will start accruing immediately

the BT will accrue interest in the normal way but of course it is at zero % so no actual charge
the purchases accrue at the purchase rate (non zero) so you have some interest to pay

if you pay the pruchases off and the interest next month then there will be a small trailing interest representing the time between the statement date and the day you pay.

pheonixrising21

CLAPTON wrote: »

you didn't pay the full bill.

This is the point - I haven't paid it yet, its not due til 21st August!!!

Do you mean that I needed to pay the previous month's statement in full in order to qualify for any interest free period, as well as paying this one off in full?

I was expecting the following (depending on how much of the bill I pay this month):

Purchase made
Interest accrues but not charged
Statement generated = balance carried forward + purchases
Payment made in full before due date
Next statement (27th August) = £0 (no interest charged)

OR

Purchase made
Interest accrues but not charged
Statement generated = balance carried forward + purchases
Part payment made before due date (cost of purchase + min payment + approx £100)
Next statement (27th August) = balance carried forward + last month's interest now charged

Instead, I have:

Purchase made
Statement generated = balance carried forward + purchases + interest

I'd be very grateful if someone could explain the full process to me, i.e. does carrying a balance forward from the previous month, etc have an impact on whether purchases qualify for any interest free period.

Please note that before I made the purchases the balance carried forward is my 0% interest BT only and I have made payments of much more than the minimum payment, on time, each month. CapOne also confirmed yesterday that there is no issue with the 0%BT and that will still run til November.

zerog

I believe that if you pay a bill in full, which includes the entire amount of a transferred balance, then any purchases which appear on the next bill will have no interest charged.

So let's say your statement period is 5 June to 4 July, you receive a bill on 10 July which says that the due date is 30 July. This bill will include the remaining purchases, interest and transferred balance from before 5 June as well, which you haven't paid off completely. On or before 30 July, you pay the full amount of that bill.

Meanwhile, from 5 July you are still spending on the card. On 4 August another statement is generated (which is after they know you have fully paid the bill due on 30 July). This is sent to you on 10 August and will have no interest charged. If you don't pay that in full on 30 August, then interest will be charged from date you made the purchases, which is sometime between 5 July and 4 August, but this interest will only appear on the bill dated 10 September.

Someone correct this if I've got muddled.

StuC75

pheonixrising21 wrote: »

I'd be very grateful if someone could explain the full process to me, i.e. does carrying a balance forward from the previous month, etc have an impact on whether purchases qualify for any interest free period.

Please note that before I made the purchases the balance carried forward is my 0% interest BT only and I have made payments of much more than the minimum payment, on time, each month. CapOne also confirmed yesterday that there is no issue with the 0%BT and that will still run til November.

Interest free only happens when previous months have been cleared too; otherwise there is always some form of residual interest carrying over..

Taken from Virgins Conditions..

If the full balance on a statement is not paid by the due date, retail interest will be charged on a daily basis, on all outstanding retail transactions from the date the transaction is posted to your account until the date of full repayment. There is no interest free period for old or new purchases if your balance is not paid in full. Consequently, interest will continue to accrue on the remaining retail balance from the date of your part payment until full payment is credited to your account.


Hence you have fallen in the trap of having a Balance Transfer at 0% but other transactions which have lost there interest free period..

Personally I never mix Balance Transfers & Purchases on the same account for this very reason \ risk..

pheonixrising21

Thanks for the responses all! So it looks like carrying my 0% BT balance through is stopping the short 0% period on new purchases.

Thats fine and I can deal with it now that I know. I'll be paying off more than the puurchases are worth shortly, so there will be a bit of interest next month and then nothing after that. I'll not be making any more purchases on the card till the BT has gone now and then making sure its paid in full afterwards - unless I persuade them to extend the 0% BT for a bit longer and then I'll put a bit more on from my other card, but no purchases this time!!!!