Clubcard Credit Card - estimated vs actual interest

Rochdale_Pioneers

I have a Tesco Clubcard credit card which with a change of job I started using for work expenses. Had the usual cash flow issues for the first month plus the expenses from work coming through late, so needed to pay my credit card balance late.

My statement was for £869 and I paid the minimum of £17 on time, with the balance following one week later than the due date. Part of the decision making process to do this was the statement on the front of the bill -

"If you make the minimum payment of £17 and it reaches us on the due date, your estimated interest payment next month is £16.61"

This month's statement comes, and the interest charge is £26.73 with a further £6.something due in trailing interest next month, so a total of £32.something.

Here is my point, and what I have raised with them. I am not disputing that I owe an interest charge. I am not disputing how they calculate interest. I am disputing that they advised me in writing that my interest charge for paying the minimum only is estimated at £16.61, when in reality its double that. OK so its an "estimate" but is it acceptable that the estimate is out by 100%?

I'm awaiting a supervisor call back as I want level of interest charge reducing to be in proportion of what they advised in writing that it would be. Any thoughts on my likelihood of success? It feels at the very least like misrepresentation of charges and if any trader tried to charge me double his estimate with no change to conditions when the estimate was done, I wouldn't pay it.

If the advise I'm about to get is that I am in the wrong, how can I trust anything that HSBC (card issuer) ever say to me again? I bank with HSBC....!

opinions4u

Did you spend anything on the card after the statement with estimated interest on was issued?

Rochdale_Pioneers

Yes, lots. Using it for work expenses. If the answer is that theyre charging interest on new Transactions Tesco have denied thats the case. Despite me now believing it probably is what theyve done.

I've had balances on cards before and carried on spending without anything quite so silly on interest charges. Had the statement said they were going to charge what they actually have done I could have diverted some £ out of savings to cover it - would have been cheaper.

opinions4u

Estimated interest assumes no new spending. You cannot expect a card issuer to guess your spending in the subsequent month and estimate interest on that too.

So as soon as a new transaction is made you start accruing interest on that in addition to the estimate that they've already provided.

If the answer is that theyre charging interest on new Transactions Tesco have denied thats the case. Despite me now believing it probably is what theyve done.

It's exactly what they've done. It's exactly what any normal credit card would do.

I've had balances on cards before and carried on spending without anything quite so silly on interest charges.

It all depends on how much extra spending you do. Think of it like a bank overdraft. The higher the debt, the more interest they'll charge.

Had the statement said they were going to charge what they actually have done I could have diverted some £ out of savings to cover it - would have been cheaper

All credit cards work this way. Pay earlier and pay more to get interest charges down.

Using it for work expenses

Id strongly suggest putting these on a card where the balance is cleared in full each month. Then you're not paying for the privilege of doing your job.

YorkshireBoy

Rochdale_Pioneers wrote: »

If the advise I'm about to get is that I am in the wrong, how can I trust anything that HSBC (card issuer) ever say to me again? I bank with HSBC....!

Isn't your Tesco credit card issued by Tesco Bank (or Tesco Personal Finance)? Everyone elses Tesco credit card is!

YorkshireBoy

opinions4u wrote: »

Estimated interest assumes no new spending.

I believe if the OP looks at his statement (perhaps overleaf/page 2 in the notes section) this will be clearly explained.

Perhaps the OP, or someone else with a Tesco credit card, can confirm?

Rochdale_Pioneers

Appreciate the replies! Won't normally be exposed on expenses, so this will be a one off. Can't say the way they do an estimate impresses me, you go off the non-caveated number on the front of the bill.

Anyway, if I get them to waive some of it as other card providers have forgiven odd transgressions in the past then fine. If not I'll ditch them. Their agent hanging up on me, and another giving an explanation to my wife that appears to be plain wrong is not customer service when there are so many other players in the market.

Rochdale_Pioneers

YorkshireBoy wrote: »

I believe if the OP looks at his statement (perhaps overleaf/page 2 in the notes section) this will be clearly explained.

Perhaps the OP, or someone else with a Tesco credit card, can confirm?

Its not. At least not in any clear way. Hence the question! Anyway, if the estimate can be so wildly out from reality its not worth printing is it.

opinions4u

Rochdale_Pioneers wrote: »

Appreciate the replies! Won't normally be exposed on expenses, so this will be a one off. Can't say the way they do an estimate impresses me

How else should they do it? How, in any way, could it possibly be spot on if you pay more than minimum or spend more?

you go off the non-caveated number on the front of the bill.

I believe it was the OFT who wanted this to happen. One of many objections card issuers gave, before ultimately caving in on the subject, was that people wouldn't understand the calculation and the differences between calculation of estimate and the reality would confuse.

Anyway, if I get them to waive some of it as other card providers have forgiven odd transgressions in the past then fine. If not I'll ditch them. Their agent hanging up on me, and another giving an explanation to my wife that appears to be plain wrong is not customer service when there are so many other players in the market.

Other cards would have charged more than the estimate too.

Rochdale_Pioneers

So I take it that regardless of the whys and wherefores of the interest charged on the 1 week late clearance in full of the last balance I take it that they're not charging me interest on this month's statement? This month will be cleared fully before the due date, and I've been advised of £6 in trailing interest on last months statement balance.

Does make me wonder how I managed with thousands of outstanding balances when I was younger - sure interest charges were in line with estimates....

Rochdale_Pioneers

opinions4u wrote: »

How else should they do it? How, in any way, could it possibly be spot on if you pay more than minimum or spend more?.

Didn't expect it to be spot on. Just not out by 100%. If the estimate is that "accurate" they really need to add a warning why the number is basically a guess. Or better still not put an estimate at all. Can understand why the OFT raised it, its exactly the kind of hidden charges they're against.