Credit card interest

Murph22

We have a john Lewis credit card. Last month we paid our bill on time, paid £30 less than the full balance (as a refund SHOULD have been going through for that amount). The refund didn't go through and now, because of £30 missing from the full balance , we're being charged interest of £21.99! Can this be correct?

MallyGirl

yes - you pay interest on the entire balance from the date of purchase. This interest is waived if you pay in full but not if you don't

Murph22

So not just interest on the £30 we didn't pay off?

grumbler

See this recent thread: Warning:330% APR on M&S credit card!

MallyGirl

Murph22 wrote: »

So not just interest on the £30 we didn't pay off?

Afraid not

Counter

Murph22 wrote: »

We have a john Lewis credit card. Last month we paid our bill on time, paid £30 less than the full balance (as a refund SHOULD have been going through for that amount). The refund didn't go through and now, because of £30 missing from the full balance , we're being charged interest of £21.99! Can this be correct?

Just so you are aware in the future; even if the £30 refund had gone through before the payment due date, I am not sure that it would have been treated as a payment. Of course a credit of £30 would go through and your balance would be reduced by that amount, however you probably would still be deemed to have underpaid your statement by £30 resulting in the interest not being waived.

I may be wrong, and someone please correct me if i am, but I cannot see that a refund from a retailer would be treated as anything other than a negative "purchase" rather than a payment to the card.

Murph22

Thank you all for your help. Glad I asked before I phoned john Lewis. I will try and take it up with the shop who messed up our refund and caused this.

Murph22

I would be interested to know re the point counter raised. I am sure I have deducted expected refunds from the balance I have paid before, and not been charged interest. Otherwise you'd end up with a credit balance if you never bought something again? I am probably wrong though! It would be good to be clued up before I talk to the shop.

Counter

Murph22 wrote: »

I would be interested to know re the point counter raised. I am sure I have deducted expected refunds from the balance I have paid before, and not been charged interest. Otherwise you'd end up with a credit balance if you never bought something again? I am probably wrong though! It would be good to be clued up before I talk to the shop.

As I said, I may be wrong but intuitively that is how I would expect it to work. It is possible that you have deducted refunds before and not been charged interest, it is even possible that different card providers treat this in different ways.

You are correct that "my" way would leave you in credit if you never used the card again. The best way to resolve that would be to continue to use the card for your regular shopping until you have spent your way out of credit.

phona

Counter wrote: »

I may be wrong, and someone please correct me if i am, but I cannot see that a refund from a retailer would be treated as anything other than a negative "purchase" rather than a payment to the card.

Just checked a statement of mine that had a refund on (from Santander) and it says "PURCHASE DOMESTIC REFUND" so looks like you're right: it's a negative purchase.

Personally, I would pay the full balance as it appeared on my statement just for the avoidance of doubt. However since I use my cards for all spending I wouldn't be putting it into credit, which would be against the terms and conditions. I doubt the card issuer would be overly concerned though; because it was a refund that put you in credit it's not likely to be a money laundering operation.

redpete

Murph22 wrote: »

I would be interested to know re the point counter raised. I am sure I have deducted expected refunds from the balance I have paid before, and not been charged interest. Otherwise you'd end up with a credit balance if you never bought something again? I am probably wrong though! It would be good to be clued up before I talk to the shop.

Different lenders treat refunds differently. I have been caught out with my Tesco card where I expected a refund to reduce the amount I needed to pay that month and ended up paying interest because I had not paid the full amount asked for on the statement. Others do count refunds towards that amount.