Credit card interest put me over limit

Sueps

Hi,
I recently borrowed money on a credit card for the first time. I had a £3000.00 spending limit and knew there was a 3% charge, so borrowed £2,900.00 (knowing the charge would be £87) and thought that would be ok.

Have just received first statement since borrowing the money and have got a £25 default fee as they have also added £29.61 interest. Is this normal?

If so, how is anybody supposed to know how much interest will be charged, to allow for it when borrowing?

:mad:

DevCoder

Unless you have a 0%interest card then there'll be a interest fee at each billing period (on top of the 3% cash fee , I assume the 3% was a cash fee).

You can tell how much interest will be charged by looking at the T&C's, cash advance fees are on top of the stated interest (APR) fee.

dzug1

Totally normal and to be expected with 99% of credit cards

You can work the interest out yourself (at least approximately) if you know the interest rate and the period you borrowed it for

opinions4u

Reading the key information on charges would have alerted you to the fact they charge interest.

YorkshireBoy

Sueps wrote: »

have got a £25 default fee

How have you managed that? Default fees are limited to £12 these days (and have been for a good while now).

Sueps

Hi all,

Thanks for the replies. I knew there would be interest, but didn't think that they would use it to add a default charge if you see what I mean. I was under the impression that as long as I paid at least the minimum payment on the first statement they would not add the default charge.

As my "spend limit" was £3,000 I thought that was the amount they would allow me to spend!

As to the £25 charge, it's a business card if that makes a difference. The money was to cover cashflow when some scumbag company took 3 months to pay.

unimaginative_user_name

Did the card give you a spend limit or a credit (=debt) limit? There is a difference.

Sueps

Hi,

It says on the statement "monthly spend limit" £3000.00.

Gromitt

Sueps wrote: »

Thanks for the replies. I knew there would be interest, but didn't think that they would use it to add a default charge if you see what I mean.

If your interest puts you over your credit limit then yes, you'll be charged a "Over limit" fee.

From the interest charged, I'm assuming you have an interest of 12.9% or thereabouts. To prevent the £25 charge, you need to ensure you pay this off before you receive your statement (or borrow less to allow for the interest to be charged)

chattychappy

Sueps wrote: »

Hi,

It says on the statement "monthly spend limit" £3000.00.

Wow, I agree, it's totally misleading. Seems me they use that term to make it sound more positive - a bit like a target to aim at!

No doubt the T+Cs make is clear, but on the basis of what's written on the statement I would complain in writing and go to the FOS if necessary. The FOS does cover "micro enterprises". Check here to see if you qualify: http://financial-ombudsman.org.uk/faq/answers/complaints_a9.html

blitzboy

Are you sure it was your first statement? Seems unusual to have interest on the first one, you usually get up to 56 days before interest is applied (i.e. after the next statement date).:undecided