NatWest CC paid in full, still charged interest

agrinnall

Sir_Robert wrote: »

You learn something everyday. I wonder how many other people were unaware of this?

Quite a lot given the number of times this same question is asked on here. Better to do the research in advance than to find out when it's too late.

dresdendave

Sir_Robert wrote: »

The call handler did sound surprised that I was on such a high apr, so this might be the approach I take of, I'll pay it but only at the lower interest rate that your operator said I should have been on. Ho hum.

Surely to prevent future interest you need to pay in full, at your actual APR as calculated on your statement, not a mythical lower APR a call centre operative suggested you might have been able to have, presumably had requested it.

fozmcfc

As others have said, generally it is how cards work.

You only get the up to 56 days interest, if you pay the card off in full every month.

I used to be rubbish with money and so every month would have interest. It used to annoy me, that even after paying off a reasonable chunk of the balance, I would still be getting a lot of interest. Of course it was because I was merely paying off transactions from 3 or 4 months ago.

Nowadays, I normally try to maximise my interest free days, by making any large transactions on the day of my statement. That way I have about 30 days before the transaction appears on the next statement and then a further 20 odd days to pay it after it has appeared.

Also, anything considered a money advance such as cash from an ATM or a gambling transaction on most cards attracts interest from the day the transaction is made.

So even someone who pays off their card in full each month, is likely to see some interest. Even if they make a payment immediately the cash advance shows on their balance, they may still have a day or two interest on it.

chattychappy

The "pay in full for two months to stop interest" is a "ready-reckoner" that is often trotted out, but different CCs do handle it differently and the T+Cs usually state it in different terms. Call handlers often don't understand the T+Cs or know how to articulate their effect.

You don't necessarily get trailing interest. Sometimes the T+Cs don't allow for it, and sometimes the CCs don't apply it even though they are entitled to. I've always assumed it's because trailing interest is relatively small and they don't want to have a ballyhoo. CCs differ in other ways too. Some require a whole transaction to be paid off to stop interest running (or at least Barclaycard used to do this) whilst others just look at the balance outstanding. (In other words you can end up paying more interest if you had 10 transactions of £500 rather than a single transaction of £5000.)

Generally, where it hits worse if is if you "almost" pay off your full balance, but not quite the whole lot.

Eg: (assume 2%/month interest, APR 26%)
1st January: £1000 of purchases
15th January: Statement issued, payment due by 31st January
31st January: £1000 paid
15th Feburary: Statement showing ZERO interest.

1st January: £1000 of purchases
15th January: Statement issued, payment due by 31st January
31st January: £999 paid
15th Feburary: Statement showing interest of about £20.

Just by paying £1 short, you pay interest on the full balance of £1000 for a month and are £20 down. In these situations, it can even be worth taking a cash advance. The fees and cash interest on the cash advance can be worth paying in order to keep the "up to 56 days interest free". An alternative is to split spend over two cards so you are at least paying one off in full and getting an interest free period on at least some of your transactions.

fozmcfc

chattychappy wrote: »

The "pay in full for two months to stop interest" is a "ready-reckoner" that is often trotted out, but different CCs do handle it differently and the T+Cs usually state it in different terms. Call handlers often don't understand the T+Cs or know how to articulate their effect.

You don't necessarily get trailing interest. Sometimes the T+Cs don't allow for it, and sometimes the CCs don't apply it even though they are entitled to. I've always assumed it's because trailing interest is relatively small and they don't want to have a ballyhoo. CCs differ in other ways too. Some require a whole transaction to be paid off to stop interest running (or at least Barclaycard used to do this) whilst others just look at the balance outstanding. (In other words you can end up paying more interest if you had 10 transactions of £500 rather than a single transaction of £5000.)

Generally, where it hits worse if is if you "almost" pay off your full balance, but not quite the whole lot.

Eg: (assume 2%/month interest, APR 26%)
1st January: £1000 of purchases
15th January: Statement issued, payment due by 31st January
31st January: £1000 paid
15th Feburary: Statement showing ZERO interest.

1st January: £1000 of purchases
15th January: Statement issued, payment due by 31st January
31st January: £999 paid
15th Feburary: Statement showing interest of about £20.

Just by paying £1 short, you pay interest on the full balance of £1000 for a month and are £20 down. In these situations, it can even be worth taking a cash advance. The fees and cash interest on the cash advance can be worth paying in order to keep the "up to 56 days interest free". An alternative is to split spend over two cards so you are at least paying one off in full and getting an interest free period on at least some of your transactions.

An excellent explanation.

In short, best to pay a credit card off in full every month

Sir_Robert

dresdendave wrote: »

Surely to prevent future interest you need to pay in full, at your actual APR as calculated on your statement, not a mythical lower APR a call centre operative suggested you might have been able to have, presumably had requested it.

Thanks for the smug response, but it does raise an interesting point.

I understand that NatWest are now just issuing two cards. A reward card and a low interest card. Anyone who has an earlier card from NatWest will be on much higher rate of interest than either of these; catch is that they have to actually a apply for one of these new cards.

From my fairly limited experience of charges in the past, if you're an otherwise reasonable customer, if you query it the bank will often cancel it on the agreement that you don't do it again or at least offer some sort of reduction on the same basis. I'd assumed that there might be some room for discussion or negotiation based on the the change of terms for existing customer. Having gone through 3 different call handlers at NatWest the other day, I didn't get any sort of compromise and have paid the bill in full.

I'm not sure if anyone else has any experience of this, but my feeling is that I will look to change my current account and main credit card having generally felt unhappy with NatWest's customer service (I'd been unhappy with my current account for awhile).