Flummoxed by decreasing balance yet INCREASING interest charges on Barclaycard

Smashingitnow

I'm very confused by what is happening with my Barclaycard.
My entire balance is transactions and no promotional rates apply to any part of it.
I have been decreasing the balance by around 250 to 280 per month, which is just a little (5 to 30 pounds) above the minimum payment
I understand interest charges vary a little depending on how many days in the month
I also understand that the interest payable will depend on the day of the month I pay the credit card
Despite this I can't understand why as my balance decreased, the interest has increased as follows:
June statement - 146
July - 157
August - 170
The minimum payments have also risen:
June - 233
July - 243
August - 255
I always pay my barclaycard on the 5th (due date also varies hugely from the 13th to the 16th)
The interest rate for me has dropped over this period from 22.19 to 22.04

So what is going on???? I feel sort of conned! Next month I will be making a larger payment of around 360 pounds, which I am hoping somehow stops whatever is happening to make my interest increase each month, despite a falling balance, no fees, and a falling interest rate!

Galloglass

It will vary with a number of elements such as the spending pattern. Oldest debts are paid off first plus the interest. There may be the additional issue of "persistent" debt. Have you had a letter expressing concern you are not reducing your debt?

Smashingitnow

Thanks Galloglass.
I haven't spent anything on the card for six months.
I haven't had a letter about persistent debt. But they did recently reduce my credit limit. I understand a lot of people have had this happen. 
I do understand that they might increase the minimum payment in a case like mine where I was at about 90% utilisation.
But this doesn't explain why the interest charged is increasing, while the balance and interest rate has gone down (to me!)
Your response is reassuring at least if what you're advising is 'these things happen'

TheAble

On the face of it it makes no sense. What is the current balance?

Galloglass

https://www.fca.org.uk/news/press-releases/fca-tells-credit-card-firms-review-their-approach-persistent-debt-customers

"Under our rules, firms must help customers to reduce the level of debt they have on their credit card more quickly"
"
"If the firms do this right, we estimate that this could save customers up to £1.3bn a year in lower interest charges."

So they are trying to help you pay less in the long run. 

Smashingitnow

TheAble said:

On the face of it it makes no sense. What is the current balance?

Thanks. It is 8500.

Smashingitnow

Galloglass said:

https://www.fca.org.uk/news/press-releases/fca-tells-credit-card-firms-review-their-approach-persistent-debt-customers

"Under our rules, firms must help customers to reduce the level of debt they have on their credit card more quickly"
"
"If the firms do this right, we estimate that this could save customers up to £1.3bn a year in lower interest charges."

So they are trying to help you pay less in the long run. 

By charging more interest as the balance decreases? I don't quite understand how that works when the interest rate has dropped on the card, albeit marginally. But thanks.

TheAble

Smashingitnow said:

TheAble said:

On the face of it it makes no sense. What is the current balance?

Thanks. It is 8500.

Suggests an interest payment of approx £155/month. Assuming you pay every fixed number of days - delaying by one day adds £5, and note different months have different numbers of days. Minimum payment is a function of interest and balance owed.
Overall I think it is explainable by the above. Try and reduce the balance as soon as possible is the call.

Smashingitnow

TheAble said:

Smashingitnow said:

TheAble said:

On the face of it it makes no sense. What is the current balance?

Thanks. It is 8500.

Suggests an interest payment of approx £155/month. Assuming you pay every fixed number of days - delaying by one day adds £5, and note different months have different numbers of days. Minimum payment is a function of interest and balance owed.
Overall I think it is explainable by the above. Try and reduce the balance as soon as possible is the call.

Thanks! Your five pounds a day explanation actually covers this....they issue the statement anywhere between the 19th and the 22nd, and although I say I pay on the same day every month, due to weekend this can vary by a day...so these small changes on such a large amount account for the difference.
I've paid off 6k of debt capital plus interest in five months but as the lowest debt APR I have, the Barclaycard is going to stay near minimum payment for a little while yet.

Galloglass

the lowest debt APR I have

You must be an excellent customer for all these companies if you are willing to incur significant amounts of interest for "renting" their money over the short term. 

I see you have explained your outlook in this other thread of yours but it is an expensive way of maintaining a credit score.

https://forums.moneysavingexpert.com/discussion/6181237/5-000-miles-and-even-more-pounds#latest

ryanm8655

Set up a direct debit instead?

i find Barclays a pain as the DD has got earlier and earlier. It was coming out on the 22nd and this month it came out on the 16th.

i assume they’re running 4 week months or something, in order to make more money. Though mine is 0% anyway...