Interest charges on closed account

Jensmile

I had a virgin/mbna credit card for a number of years that I was paying minimum payments to every month, on 8 dec I payed off the full balance in a lump sum and phoned the company to close the account, I asked on the phone and was assured the balance was £0 and the account closed. Later that month I got a letter from them to say I owed £14.25 interest, I phoned again and was told this was interest charged for what the balance was in November before I closed the account, and that the interest charge was only added to the account AFTER the 8th of December and that is why I was told the balance was £0 on the day I closed the account. I was unhappy but thought oh well, I assumed my direct debit would pay this as it was still set up and that would be that. Today I received a letter saying I was getting referred to a collection agency for this money so I phoned again to ask why only to be told mbna had not taken any direct debit as the account was closed so they never took the £14.25 and the charge has went up to £36 as interest is getting charged daily. I said I was happy to pay the original amount and apologised about the direct debit mix up but I was told no. My concern is how can they add interest charges to an account that was £0 on the day it was closed and then continue to charge interest to the interest that was charged after the account was closed? Surley I should only owe what was outstanding when the card account was closed, how can they add charges to an account that had a closing balance of £0 and then add daily interest as if this was an open account? I'm waiting on a manger to phone me back.
Thanks for your help

[Deleted User]

It'll be trailing interest, which wouldn't have been reflected on the statement, if that is where you took the final balance from. Standard on all cards.

I'm surprised that the DD wasn't taken though. This may be your best negotiating point.

mjm3346

If you just paid the statement balance in full there would be interest from the statement date up to the point you paid it off.
If you asked for a settlement figure it would have been higher than the statement balance and should have included all interest charges.

Jensmile

I think there has been a mixed up about statement balance and settlement figure.....I assumed when I phoned them in December it was a settlement figure I was getting but must not have been.......I phoned them up when I received the letter today with my debit card in hand to pay the original charge of the trailing interest, it was the additional interest that they have been adding daily since they added this charge to my closed account that threw me and that I am most annoyed about. I told the guy on the phone I was sorry and had assumed the direct debit would have payed this off and I was happy to pay it now but not the additional interest but he was really horrible in the way he spoke to me and that's when I asked to speak to a manager, but no one was available so I'm waiting on a call back. Just not sure what to do, am I in the wrong and should I just pay them in full or should I fight my case to only pay the original amount? Cheers

Jamie94

Jensmile wrote: »

I had a virgin/mbna credit card for a number of years that I was paying minimum payments to every month, on 8 dec I payed off the full balance in a lump sum and phoned the company to close the account, I asked on the phone and was assured the balance was £0 and the account closed. Later that month I got a letter from them to say I owed £14.25 interest, I phoned again and was told this was interest charged for what the balance was in November before I closed the account, and that the interest charge was only added to the account AFTER the 8th of December and that is why I was told the balance was £0 on the day I closed the account. I was unhappy but thought oh well, I assumed my direct debit would pay this as it was still set up and that would be that. Today I received a letter saying I was getting referred to a collection agency for this money so I phoned again to ask why only to be told mbna had not taken any direct debit as the account was closed so they never took the £14.25 and the charge has went up to £36 as interest is getting charged daily. I said I was happy to pay the original amount and apologised about the direct debit mix up but I was told no. My concern is how can they add interest charges to an account that was £0 on the day it was closed and then continue to charge interest to the interest that was charged after the account was closed? Surley I should only owe what was outstanding when the card account was closed, how can they add charges to an account that had a closing balance of £0 and then add daily interest as if this was an open account? I'm waiting on a manger to phone me back.
Thanks for your help

You were sent a bill specifying the amount outstanding, the minimum payment due and the date.

Does the bill specify they would collect the full amount by DD?

If not, then it was up to you to settle the bill, or at least the minimum payment, by the due date.

bengal-stripe

Jensmile wrote: »

......it was the additional interest that they have been adding daily since they added this charge to my closed account that threw me and that I am most annoyed about.

How much money are we talking about?

Presuming your interest rate is 20%; the interest on the outstanding £ 14.25 would be £ 2.85 per annum and less than a single pence per day.

Dear oh dear, all this drama about 10 or 20 pence. :T

Jensmile1

The original amount that I owed (unknowingly as they applied it after I was told my account was clear and closed) that was added in the middle of December is £14.42. Today when I received the letter to say they had not received payment ( DD should have came off on 16 jan) I phoned up to pay and I was told that amount had risen to £36 due to daily interest. So it's quite a jump in less than 8 weeks.

I have been paying this card by direct debit for lots of years without any problem, I know it is a silly schoolboy error not to double check that a payment has came out your bank but I suppose I became complacent as this DD has been so long standing.

The original problem it seems has been the mix up when I phoned to close the account and asked for a settlement figure and instead was given a statement balance.

Herbalus

My guess is that the £36 includes late fees for non-payment.

Jensmile1

Ok this is what happened

28/11 I payed a lump sum to clear the card
4/12 DD came off which cleared the rest
8/12 I phoned to confirm the settlement figure and was told I was £26 in credit this was transferred back to my bank and I was told the account was clear and closed
Late dec....I receive a letter to say I owe £14, I phoned to ask about it and was told it was an interest charge added after the 8 dec, I told them ok it will be payed off with my regular direct debit in jan anyway, nothing was said over the phone about my DD being canceled with the closure of the account.

Today I receive a letter to say they have not received payment and on the phone was told it has now jumped from £14 to £38.

It just seems a bit much that they can add whatever charges they want to a closed account when I was told I owed nothing and they even payed me money back on the day I phoned for a settlement figure. Why did they not keep that £26 if they knew I would be due a charge for tracking interest later that month?

bigadaj

Jensmile1 wrote: »

Ok this is what happened

28/11 I payed a lump sum to clear the card
4/12 DD came off which cleared the rest
8/12 I phoned to confirm the settlement figure and was told I was £26 in credit this was transferred back to my bank and I was told the account was clear and closed
Late dec....I receive a letter to say I owe £14, I phoned to ask about it and was told it was an interest charge added after the 8 dec, I told them ok it will be payed off with my regular direct debit in jan anyway, nothing was said over the phone about my DD being canceled with the closure of the account.

Today I receive a letter to say they have not received payment and on the phone was told it has now jumped from £14 to £38.

It just seems a bit much that they can add whatever charges they want to a closed account when I was told I owed nothing and they even payed me money back on the day I phoned for a settlement figure. Why did they not keep that £26 if they knew I would be due a charge for tracking interest later that month?

Doesnt sound as though they have managed this very well.

Tell them you want to make a formal complaint, they'll probably back down, so get the debt written off but make sure they commit to correcting your credit file as well.

Herbalus

I would also be concerned that you potentially have a missed payment mark on your credit file, which could harm future applications. If this is so, you might want to ask them if they could remove it because of the DD that they failed to take. Although if they dispute that the failed DD was their fault, they might argue that a missed payment is a missed payment and won't remove the mark.