Help understanding interest

Simple-SI

Hi all,

I have had a Barclays Freedom card for a few years and never had a problem paying it in full every month. These past four months however have been an absolute nightmare, and I have been paying so many bank charges that Im considering just getting rid of this card.

While I acknowledge that some of them are my fault, I am struggling to understand this Feb 2016 charge.

November 2015
Usually the payment date is on the 9th of every month, but November 2015 was the 6th. I owed £1172 and paid £1172 on the 8th, and was charged £12 late payment fee and £22 interest.

December 2015
Owed £1000, paid £1000, no charges

Janurary 2016
Owed £2249, paid £900, interest £51
Our landlord told us at Christmas that as per our contract, he was giving us until 31st Jan 2016 to move out, as he wanted to refurb his house. This meant that I would need a cash in the bank at the end of Jan 2016 (worse possible time of the year) to pay a new deposit and rent upfront, while my previous deposit is locked up, resulting in me not being able to pay off my card this month.

Feb 2016
There was a payment due of £2603.17 on 9th Feb, of which I paid £2420, leaving an outstanding amount of £183.17. This has been added to my current purchases, leaving a new amount of £695 due on 9th March.

Looking at the interest I was charged in Feb, its says, "Interest at 0.00000% £42.51." I am struggling to understand how I was charged £42.51 interest on an outstanding amount of £183. Barclays have said that its daily interest charged on the full amount of £695, even though this amount is due on 9th March?

I have aksed them for a more in-depth breakdown, but could someone help me understand how they possibly calculated £42.51 interest on an overdue amount of £183, or even how they calculate £41 interest on £695?

I have now paid Barclays £130 in bank charges over the past 4 months and feel sick about it. Think I am going to pay this card off then bin it.

Thank you

[Deleted User]

It's charged on your daily balance. So much of it will come from the £2603 balance for however long you were carrying that balance, then on the £183.

Interest is only waived if you pay in full each month.

Consumerist

Simple-SI wrote: »

Feb 2016
There was a payment due of £2603.17 on 9th Feb, of which I paid £2420, leaving an outstanding amount of £183.17. This has been added to my current purchases, leaving a new amount of £695 due on 9th March.

As has been summarised by ZX81, above, ever economical with explanations, you have to look at your daily balance since each purchase was made using your card.

The payment due on 9 Feb has accumulated from the unpaid balance carried forward from the previous statement and then each transaction has also been accruing interest charges day by day.

The only way to avoid interest charges is to pay off the full balance every month. Even if you do this, don't forget that the first time you pay off in full, there will still be interest to pay on the following statement because of the time lag between getting your statement and making your payment.

All credit cards do this so there will be nothing to gain from changing your card unless you get one with a lower interest rate. The interest charges may be a little less but they will still be there if you don't pay off in full.

TheDebtinator

On a side note, why did your landlord only give you one months notice to move out? Did they request it via a section 8 or section 21?

Ben8282

Simple-SI wrote: »

Hi all,

I have had a Barclays Freedom card for a few years and never had a problem paying it in full every month. These past four months however have been an absolute nightmare, and I have been paying so many bank charges that Im considering just getting rid of this card.

While I acknowledge that some of them are my fault, I am struggling to understand this Feb 2016 charge.

November 2015
Usually the payment date is on the 9th of every month, but November 2015 was the 6th. I owed £1172 and paid £1172 on the 8th, and was charged £12 late payment fee and £22 interest.

December 2015
Owed £1000, paid £1000, no charges

Janurary 2016
Owed £2249, paid £900, interest £51
Our landlord told us at Christmas that as per our contract, he was giving us until 31st Jan 2016 to move out, as he wanted to refurb his house. This meant that I would need a cash in the bank at the end of Jan 2016 (worse possible time of the year) to pay a new deposit and rent upfront, while my previous deposit is locked up, resulting in me not being able to pay off my card this month.

Feb 2016
There was a payment due of £2603.17 on 9th Feb, of which I paid £2420, leaving an outstanding amount of £183.17. This has been added to my current purchases, leaving a new amount of £695 due on 9th March.

Looking at the interest I was charged in Feb, its says, "Interest at 0.00000% £42.51." I am struggling to understand how I was charged £42.51 interest on an outstanding amount of £183. Barclays have said that its daily interest charged on the full amount of £695, even though this amount is due on 9th March?

I have aksed them for a more in-depth breakdown, but could someone help me understand how they possibly calculated £42.51 interest on an overdue amount of £183, or even how they calculate £41 interest on £695?

I have now paid Barclays £130 in bank charges over the past 4 months and feel sick about it. Think I am going to pay this card off then bin it.

Thank you

This is very badly explained.
It would appear:


Statement issued October 2015 £1172
Payment due 6th November
Paid in full £1172 8th November


Statement issued November 2015 £1000
Included in this statement was a late payment fee of £12 and interest of £29 due to late payment
Paid in full £1000


Statement issued December 2015 £2249
From payment date possible to determine that unstated statement date would be around 14th of month
You had therefore incurred this level of debt well before Christmas when your landlord gave you notice
Included in this statement was interest of £51
You paid £900 leaving £1349 outstanding


Statement issued January 2016 £2603.17
You paid £2420 leaving £183 outstanding


Statement issued February 2016 £695


You don't say which statement (Jan or Feb) the £42.51 was charged on but I am assuming Feb by your comment about the £183
You don't say how much interest was charged on the Jan statement.


The period covered by the statement issued in February had an opening balance of £2603.17, which was reduced to £183.17 presumably on the payment due date. You therefore paid interest on £2607.17 from the date of the statement until the payment date and on £183.17 thereafter. You also made additional purchases during this period totalling approximately £470 on which you would have been charged interest from the date of the transaction.


As interest was obviously not charged at 0% as stated above, your actual interest rate is not stated and the dates of the purchase transactions and payment are not stated, it is difficult to accurately calculate the amount of interest you should have paid. However, the amount charged does not come across as in any way unreasonable or excessive.