Over Limit fee's caused by interest charges

Sleepy_G

I have recently been hit by some £12 'over limit' charges from 2 different Credit Card companies - and on every occasion the crime of being over my credit limit was triggered by them adding an interest charge. As I don't know precisely when, or exactly how much, that charge will be until it's passed, this seems rather unfair.

It feels like they are adding additional fee's that are created purely by virtue of their own charge, which is a double-whammy.

Is this allowed under Banking / FCA rules?

YorkshireBoy

Sleepy_G wrote: »

As I don't know precisely when, or exactly how much, that charge will be until it's passed, this seems rather unfair.

Not really. They provide an 'estimated interest next statement' figure on your statement. They go on to say that this is based on receiving the minimum payment on the payment due date and no further transactions being placed on the account.

So you're spending money on the card...and paying as late as you can...and you're nudging the limit. It's not a good place to be, so suggest you cut back and have a lean month or two to get ahead.

HampshireH

Do your CC terms and conditions not state when interest is added to an account? It would normally be around the same time each month.

Surely the amount will be a % of your balance so you should be able to work out the amount due each month.

YorkshireBoy

HampshireH wrote: »

Surely the amount will be a % of your balance so you should be able to work out the amount due each month.

It's transactions made since the statement that are doing the damage. See my post #2 above.

Ben8282

The real problem here is that you are paying interest on your credit cards and using them right up to the limit, neither of which is good. This also appears to be happening quite often.
You need to address the cause of this. It appears that you have debt problems that you need to sort out.

Nasqueron

Credit cards work on the basis you buy something then if you don't pay off in full, they charge you interest which is added to the card. If you are so close to the limit that the interest takes you over then you are not managing your account well, nothing to do with the bank who are quite correctly charging you for breaching the Ts & Cs you agreed to when taking the card out - to keep inside your limits. Pay off more of the card and get your balance down.

Sleepy_G

I really wasn’t looking for a lecture on my home budget management which, to be honest, comes across as rather patronising. That’s not to say the answers given are bad advice, simply that they are not answering the question being asked.

I was under the impression that there are rules or guidelines that prevent financial services companies from making charges where that charge was created by the passing of another charge.

I might be mistaken in this but it feels like poor practice to me.

A4445

I don’t believe they have done anything wrong. You need to make sure you have enough available credit to cover any interest costs. Perhaps it would be a good idea not to be so close to your limit.

My partner has this issue once and the creditcard company waved the fee as it was a first offence. What companies provide you cards? Give them a call and see what they say.

It is really down to you how you manage your finances but this board can be a bit judgment sometimes. If you need help budgeting, the debt free wannabe page is much more friendly.

YorkshireBoy

Sleepy_G wrote: »

I was under the impression that there are rules or guidelines that prevent financial services companies from making charges where that charge was created by the passing of another charge.

I believe there are rules around not charging interest on default fees, but maybe only if you pay them off before the next statement date? Maybe that was what you were thinking of?

Did you find the estimated interest section on your statement? Was it correct last month? If not, how far off was it?

enthusiasticsaver

Your statement will show estimated interest and somewhere in the terms and conditions it will show when interest is added but it will usually be the same day each time. It is a long time since I paid interest on a credit card but I seem to recall it is on the statement date so it is best to ensure that you have more leeway on your credit limit. They have not done anything wrong anyway.

[Deleted User]

Sleepy_G wrote: »

I really wasn’t looking for a lecture on my home budget management which, to be honest, comes across as rather patronising. That’s not to say the answers given are bad advice, simply that they are not answering the question being asked.

I was under the impression that there are rules or guidelines that prevent financial services companies from making charges where that charge was created by the passing of another charge.

I might be mistaken in this but it feels like poor practice to me.

Maybe get a responsible adult to help you manage your cards. It's not rocket science. The interest is added at the end of the billing cycle, just before the statement is produced.

If you run your cards to the limit, the interest will take you over the limit. It's not poor practice - it's for you to manage your card properly. Using your card below 95% of the limit, unless you clear it in full every month is the best way to prevent fees.