Santander 123 credit card "interest"

eddiejones

So I got a 123 credit card a couple of months ago. I was under the impression that if I paid my balance off in full, I wouldn't incur interest charges and stuff.
I set up a direct debit when signing up so that the full balance would come out of my 123 current account when it was due (I didn't specify the date but it was simply an option for it come out of my current account, which I could select when signing up).

Anyway, so I have just received my monthly statement and there are loads of "PURCHASE"s and the final thing is "Interest" for £7 which is included in the balance owed.

Now, I did in the previous month use it for a "Cash transaction", which actually incur an interest rate of 2.20% but:
a) I thought that would only apply from the date when the balance was due
and b) Surely that should have been applied last month? Given I paid last month's balance off correctly.
Actually looking at last month's statement, I appear to have a charge for £3.10 interest...And also have a 3% charge for a "Quasi Cash Transaction" which is what I was referring to just above.


I thought that having this card would mean I wouldn't get charges as long as I paid off my balance but have I misunderstood what is going on?

Thanks!

Gromitt

You used your card for withdrawing cash from an ATM or a gambling transaction? If so then the interest is calculated daily from the date of the transaction. Interest keeps being added even after your statement is produced until you have paid it off, so typically I would expect at least 2 months interest if you only pay on the due date. So the second statement is probably 20 days of interest (from the statement date until the due date).

If you don't want cash withdrawals to give you interest (or just pence), pay them off as soon as possible after using them, preferably the same day.

grumbler

eddiejones wrote: »

Now, I did in the previous month use it for a "Cash transaction", which actually incur an interest rate of 2.20% but:
a) I thought that would only apply from the date when the balance was due

You were wrong.

and b) Surely that should have been applied last month? Given I paid last month's balance off correctly.

Interest was applied - till the statement date. Then it was added from the statement date till the payment date.

I thought that having this card would mean I wouldn't get charges as long as I paid off my balance but have I misunderstood what is going on?

Interest gets waived on purchases only if the balance is paid in full.

eddiejones

Ok, thanks both.

By "paying my balance in full" I assume that means paying off my statement on the due date. Obviously when I pay that, I have a higher balance to pay off because of transactions inbetween the statement being issued and me paying it.

Also, if I go to my summary (this might need someone familiar with the Santander interface), it says

Previous balance: £x
Payments received: £x
New transactions: £y
Your new balance: £y
Minimum payment due: £z on 16/05/2014
Next month's estimated interest: £a



Is 'a' assuming I only pay the minimum off?

I mean I've already paid a phenomenal amount for withdrawing this cash with the charge at the time and the interest....I'm just surprised at how badly having this credit card is actually working out. I kinda got it because I thought it would be good to get a credit rating history and because I thought it was convenient to pay for stuff, get cashback and pay off the monthly statement when it came but all is happened that I appear to have incurred quite some charges.

YorkshireBoy

eddiejones wrote: »

Is 'a' assuming I only pay the minimum off?

Yes, and also that:

1. You pay it on the payment due date, and

2. You make no further transactions between now and your next statement date

If you read your statement fully, ie not just page 1, you'll see they define "estimated interest" as above.

eddiejones

Ah yes, thought I had recalled reading that somewhere

grumbler

eddiejones wrote: »

By "paying my balance in full" I assume that means paying off my statement on the due date.

Correct.

Is 'a' assuming I only pay the minimum off?

I guess so. Another assumption is that there are no any new transactions except the minimum payment.

I mean I've already paid a phenomenal amount for withdrawing this cash with the charge at the time and the interest....I'm just surprised at how badly having this credit card is actually working out.

If you don't want surprises read the T&C or, at least, the Summary Box. Cash from CCs is very expensive.

I kinda got it because I thought it would be good to get a credit rating history and because I thought it was convenient to pay for stuff, get cashback and pay off the monthly statement when it came but all is happened that I appear to have incurred quite some charges.

Assumptions, assumptions...
How is cash more convenient to 'pay for stuff'?
In fact taking cash is bad for credit history as only desperate people resort to this.
And what 'cashback' do you mean? Some CCs do pay cashback, but on purchases only and clearly state this. Cashback at checkouts is normally offered for debit card payments only.

eddiejones

Sure, I've only used it once to get cash out, won't do it again .

I get 3% cashback for trains (and TFL) which I use every day more or less to get to work. And also get 1-3% at supermarkets.

zerog

If you use a credit card for purchases, the merchant gets charged 1-4%. If you use a credit card to get cash then buy something, the merchant doesn't pay the credit card company anything, therefore you need to pay.

iAMaLONDONER

eddiejones wrote: »

Sure, I've only used it once to get cash out, won't do it again .

I get 3% cashback for trains (and TFL) which I use every day more or less to get to work. And also get 1-3% at supermarkets.

Only 1% at supermarkets (including M&S)!

I love the 3% on TfL tickets!

AISA86

Hi folks. Just thought I would quickly add to this I have a very similar query and just want to make sure I have understood correctly. I have had my 123 credit card for about two months and used it for various purchases. I racked up near £2,000 worth of transactions but signed up for the automatic direct debit payment for the full amount each month.

A few days ago, that was paid and cleared the previous month’s statement but I still continued to use the card, and since then, I have around £400 worth of transactions and will continue to use the card every few days. On the card info box via my online account, it gives the next payment date as the 02/06/2014 which is fine, but, my monthly interest is estimated to be around £6. I’m somewhat confused by this as I was under the impression that no interest would occur providing the balance is cleared each month.

I just want to clarify that the card is NEVER used for cash withdrawals, only purchases.