Issues with interest

Has there been any work \ calculations done on interest charges

Had an interesting experience with Santander

Took out a 0% balance transfer card with them - and transferred it all out - no issues for a few months. Made a mistake and used it for a couple of purchases, realised it and made a payment to cover those costs - so the only balance was still below the balance transfer card rate

They charged me interest!
So I referred them to the summary box "If you do not pay off your balance in full, payments we receive are applied to the highest interest bearing transactions first."
They agreed their should not have been any interest - refunded and said it would not happen next month
No transactions done in the month and hey presto - a new interest charge but know 50% higher than last - so again phone in, agreed should not be there, refunded
No one seems to know why the system is doing it and cannot confirm it will not happen next month - so I will clear the balance

But how many other people are being charged too much interest because the system is not clearing the correct sums first

Any one else had issues?


  • zx81zx81 Forumite
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    Check whether you're waiting for the transactions to statement or not.
  • pinknsparklypinknsparkly Forumite
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    As zx81 says - did you pay off the transactions before they appeared on your statement? Because the repayments do indeed pay off the highest interest part first, but ONLY on transactions that were on the last statement. So if you made the repayment too early then, despite you believing that you'd paid off the transactions, you actually paid off a chunk of the balance transfer instead. Then if your next repayment was less than the total purchases made in the previous month you will still have an outstanding interest-charging balance as you've not paid it off fully. This happened to me when I accidentally used my 0% purchases credit card to top up my Revolut card (which is treated as a cash withdrawal). I had to wait over a month before the transactions were added to my statement and I could pay them off. I therefore ended up paying two months worth of interest as cash withdrawals start accruing interest from the day of the transaction.

    If this is what's happened to you, then Santander were actually correct in charging you interest!
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  • mrs_Tmrs_T Forumite
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    Interesting. I accidentally made a purchase on my Santander 0% card 2 days after the purchase offer ended. When I saw interest on my statement and phoned them they offered a as a goodwill gesture to remove the interest charge as long as I repayed more than the value of the purchase which I did and the interest showed as coming off my statement. I have not used the card again. This month however there is an interest charge again and when I phoned they said it's because some of the repayment I made went against the 0% balance transfer rather than the purchase. I will email them asking why all the repayment didn't go against the interest bearing purchase.
  • mrs_Tmrs_T Forumite
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    Does this reply from Santander make sense? My card is 0% on bt's for another 12 months.
    Any payment you make to your credit card will be used to pay off your statement balance first. This is the balance that has been carried over from the previous statement period.

    To make sure you pay the least amount of interest possible, when you make repayments we will allocate them to the highest interest rate balance first. For example if you are being charged 18.95% for purchases you have made alongside a 0% on a balance transfer, we will allocate your payment to the purchase balance first.

    Please note if there is no statement balance or the payment exceeds the statement balance, payments will then be applied to transactions in the current period in the same high to low interest rate order.

    Your Credit Card has incurred Purchase interest because the balance has not been paid off in full.

    If the account balance is made up of purchases only and the billed balance is paid in full, no interest will be charged. However if the billed balance is not paid in full then purchase interest will be charged.

    Purchase interest will still apply, even if a purchase you have made with the card is later refunded.

    To avoid Purchase interest the owed balance will need to be paid off in full each month.
  • moleratmolerat Forumite
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    It makes perfect sense to me. I believe the response they gave was not correct though, the interest was likely that accrued between the production of the statement and the time you paid it off.
  • DaveMMDaveMM Forumite
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    Apologies for late responding - did not get alerts

    Makes sense re the interest and when repayments made - but then interest occurred again the next month as well, so no I do not believe it was due to when - but there is an issue. The interest was credited again. Expecting the same to happen this month!
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