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Natwest CC PPI Offer

Hi everyone, first ever post here although I've been a lurker for a while!

My husband and I have been trying to reclaim PPI on a couple of credit cards with varying success. Capital One have declined both of our initial complaints (not surprising) so we're working on them but the main reason fit this post is that we've just had an offer from Natwest.

The offer is roughly £700 in PPI repayments and £800 in interest. Good news! However they have stipulated in their offer letter that they will be offsetting the amount against the outstanding balance on the credit card. Thus leaving us with about £100 in cash.

Now I've tried to do a bit of research online into offsetting and as far as I can see the banks are only allowed to automatically offset if the account is in arrears. Is this correct?

The credit card has an outstanding balance but has never been in arrears. Payments have always been made on time.

I am also confused about the interest. As we have to pay tax on this, surely the bank can't decide to use this "income" before tax to pay off their balance?!

We will be using the money to pay off debts but the capital one balance has higher interest and we therefore want to pay this off first.

Any advice would be greatly appreciated!

Thanks.

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