Warning:330% APR on M&S credit card!

mamajj

I normally pay off my credit card, but couldn't quite afford the full amount this month so paid £2000 (plus minimum payment DD of £57.24 toward my £2289.85 balance. Iwas surprised to find I had been charged £64.07 in interest ie that interest had been applied to the full £2289.85...I might as well not have bothered paying anything at all!!! I called them up today and as I do not normally underpay they have waived the interest but I want to warn others about this practice which they insisted was correct. I roughly calculated that on the remaining unpaid balance of £232.61 that is 330% APR - if I am correct that is absolutely scandalous!!!!

[Deleted User]

It's not charged on the unpaid balance. It's charged on the full amount you have borrowed, on a daily basis. All cards work this way.

The APR is the one on your agreement.

If you had not paid anything at all, then you would have been hit with late fees and also charged even more interest.

bsms1147

All credit cards operate like this. Interest accumulates on the total balance at a daily rate. If you pay off in full the interest is waived. If you don't pay off in full you pay the interest on the total statemented balance.

It's not the same as a 330% APR. Your APR remains whatever it says on your statement.

If you clear the balance in full this month there will remain trailing interest (interest on your interest) for the next month, which will be repaid the next month of paying in full.

chattychappy

Repeated use of "!!!" is a sure sign of somebody who hasn't read and understood the T+Cs and then got surprised when things didn't work the way they assumed.

All credit cards operate this way.

Interest is calculated on a daily basis from transaction date until when payment arrives. Only if you pay the balance in full do they not apply the interest.

No scandal. In your case the interest was calculated on your £2289.85 until your payments arrived, and then on the balance outstanding. Your APR figure is wrong because you wrongly assumed the interest was only on the shortfall.

You will likely get some further, trailing, interest next month.

JKSandy

"Warning:330% APR on M&S credit card!"
"if I am correct that is absolutely scandalous!!!!"

Sorry I know we should be kind to new posters but you really shouldn't have a credit card when you clearly either don't understand how they work or can't read T&C's correctly.

And I have no doubt you have probably called up and gave some poor staff member an ear full.

Herbalus

JKSandy wrote: »

Sorry I know we should be kind to new posters but you really shouldn't have a credit card when you clearly either don't understand how they work or can't read T&C's correctly.

You still have the option of explaining how things work in a nice manner like the other posters before you. I don't think its your place to suggest someone shouldn't have a credit card because of this, and it comes across quite harshly. Yes, it was an overreaction, and yes, they should understand how credit cards work if they have them, but a simple explanation of where they've gone wrong is sufficient.

eddddy

I'm with Herbalus on this.

Obviously I dont know anything about mamajj (the op), but my daughter is in her first year at uni, and she is a little overwhelmed with the complexities of dealing with credit cards, bank accounts, student loans, mobile phone contracts, gym memberships, insurance, tenancy agreements, dodgy estate agents, dodgy telesales companies etc.

She has made mistakes (most of which she could have avoided if she had thoroughly read and understood contracts, t&cs etc).

But I sincerely hope that the people she seeks advice from are a little more friendly and understanding than some of the posters here.

(I was going to finish that last sentence with 3 exclamation marks, but I fear the irony may be lost.)

katejo

Deleted_User wrote: »

It's not charged on the unpaid balance. It's charged on the full amount you have borrowed, on a daily basis. All cards work this way.

The APR is the one on your agreement.

If you had not paid anything at all, then you would have been hit with late fees and also charged even more interest.

I have an M & S card and I pay mine in full every time. I assumed that this rule did apply to all credit cards but I have another one (Sainsbury's Nectar) which doesn't appear to do it the same way. I don't have their terms and conditions to hand now to check but I remember being surprised on reading them

Tixy

katejo wrote: »

I have an M & S card and I pay mine in full every time. I assumed that this rule did apply to all credit cards but I have another one (Sainsbury's Nectar) which doesn't appear to do it the same way. I don't have their terms and conditions to hand now to check but I remember being surprised on reading them

Odd. How old is your sainsbury's card? I have one taken out last year and mine definitely works the same as that and as (almost) all cards. These are the relevant T&Cs from mine (and on a new account now)

Interest Free Period

• Maximum 56 days for purchases if you pay the full balance shown on your previous and current statement on time.
• There is no interest free period on cash advances or balance transfers.

Interest Charging Information
You will not pay interest on new purchases if you pay your balance in full and on time each month. Otherwise, the period over which interest is charged is as follows:

From Until
Purchases Date debited to your account Paid in full

http://www.sainsburysbank.co.uk/credit_cards/summary_box/cca-summary-box-nectar-mar2014.shtml

katejo

Tixy wrote: »

Odd. How old is your sainsbury's card? I have one taken out last year and mine definitely works the same as that and as (almost) all cards. These are the relevant T&Cs from mine (and on a new account now)



http://www.sainsburysbank.co.uk/credit_cards/summary_box/cca-summary-box-nectar-mar2014.shtml

Not more than a year old. I will have to look at my statement again but there was definitely something which I hadn't expected.

redcard

Herbalus wrote: »

You still have the option of explaining how things work in a nice manner like the other posters before you. I don't think its your place to suggest someone shouldn't have a credit card because of this, and it comes across quite harshly. Yes, it was an overreaction, and yes, they should understand how credit cards work if they have them, but a simple explanation of where they've gone wrong is sufficient.

I don't think it's your place to suggest it's not his place. Seriously.

Anyway, the OP won't bother logging in again, so no harm done.