Bank interest

SHEILA54

Hi
I am at a loss to understand this so maybe someone can help me. I have a Tesco Mastercard and, for a long while, have paid off the full balance every month. Last month I had a balance of £3989 and was a bit short so I paid £3700. This month I have been charged
£70.15 interest for not paying the extra £289 which seems extortionate to me as it amounts to 25% of that amount. I have an excellent credit rating and this was 18.9% when I took it out but does this mean that I would be charged 25% on the whole amount if I had only made the minimum payment?

Please can someone advise?
Thanks

worried_jim

You pay interest on the full amount if you don’t clear it. This will have little bearing on your credit rating.

PeacefulWaters

SHEILA54 wrote: »

Hi
I am at a loss to understand this so maybe someone can help me. I have a Tesco Mastercard and, for a long while, have paid off the full balance every month. Last month I had a balance of £3989 and was a bit short so I paid £3700. This month I have been charged
£70.15 interest for not paying the extra £289 which seems extortionate to me as it amounts to 25% of that amount. I have an excellent credit rating and this was 18.9% when I took it out but does this mean that I would be charged 25% on the whole amount if I had only made the minimum payment?

Please can someone advise?
Thanks

Imagine if it was an overdraft charging interest at your credit card rate. You'd see it as a completely acceptable amount to have to pay for the time and amount of debt involved.

Clearing in full and not being charged interest is a generous concession. You lose that concession if you only part pay the balance.

You refer to being charged 25% of the remaining balance. But interest is accruing on your much larger balance long before the card company know what your remaining balance will be. And is only waived if you clear in full. Which you didn't.

A heads up. They'll charge you interest on your remaining balance on next month's statement too. Clear in full ASAP to minimise this. And then get back to clearing in full every month!

RG2015

Most if not all credit cards do not charge any interest if the FULL statement balance is paid by the due date. Your interest charge will be the statement balance at 18.9% pa for the number of days from the statement date to the payment received date.

If you had only made the minimum payment you would still have paid the same interest as the same amount would have been outstanding from the statement date to the payment date. Your new balance is £289 so the interest on this next month will be about £4.50. You can reduce this if you pay the £289 as soon as possible.

The interest free period is a major concession from the card issuer and they make their money from people who do not pay the full balance by the due date.

SHEILA54

Thank you, I didn't realise or I would have found a way to pay in full. I will pay off the £289 now and be more careful in future

MABLE

With me I pay the full balance each month less £1.00. I know from experience they will write that off.

robber2

MABLE wrote: »

With me I pay the full balance each month less £1.00. I know from experience they will write that off.

Seriously? Is it really worth the stress and potential cost to you simply so you can delay paying £1 ech month !!!!

Rob

MABLE

robber2 wrote: »

Seriously? Is it really worth the stress and potential cost to you simply so you can delay paying £1 ech month !!!!

Rob

Please explain to me how I am delaying paying the £1 per month. Also what potential cost to me.

Let me explain. My account is made up on the 5th of each month. I know what my total balance will be before the statement is produced. So based on that knowledge I make the payment less the £1.00 that will be written off before the new statement is produced. Now if for some reason they decide they will not be writing off any more small amounts then the new statement will show this.

I canot help feeling you are the one getting stressed.

Mutton_Geoff

SHEILA54 wrote: »

Hi
I am at a loss to understand this so maybe someone can help me. I have a Tesco Mastercard and, for a long while, have paid off the full balance every month. Last month I had a balance of £3989 and was a bit short so I paid £3700. This month I have been charged
£70.15 interest for not paying the extra £289 which seems extortionate to me as it amounts to 25% of that amount. I have an excellent credit rating and this was 18.9% when I took it out but does this mean that I would be charged 25% on the whole amount if I had only made the minimum payment?

Please can someone advise?
Thanks

Have you called them? I have often find they have some leeway to remove or reduce charges, even if they are fully justified, if you are a long term good customer.

RG2015

MABLE wrote: »

With me I pay the full balance each month less £1.00. I know from experience they will write that off.

MABLE wrote: »

Please explain to me how I am delaying paying the £1 per month. Also what potential cost to me.

Let me explain. My account is made up on the 5th of each month. I know what my total balance will be before the statement is produced. So based on that knowledge I make the payment less the £1.00 that will be written off before the new statement is produced. Now if for some reason they decide they will not be writing off any more small amounts then the new statement will show this.

Just to clarify, if your monthly statement is going to be £575.65 on the 5th of the month you pay £574.65 before the 5th of the month.

Your statement is then produced and the balance which should be £1.00 actually shows the statement balance as £0.00.

I also note that you are paying at least 26 days before the due date and losing the usual interest free period of 25 days. If the balance was £1,040 this could earn £1.00 in interest in an easy access account paying 1.35%.

£1,040 x 1.35% x 26/365 = £1.00

SnowTiger

RG2015 wrote: »

Just to clarify, if your monthly statement is going to be £575.65 on the 5th of the month you pay £574.65 before the 5th of the month.

Good to know.

Is this with Tesco credit card or has the thread meandered?