Interest

amhanna

I have a Tesco credit card and I have had some late payments a few years ago but looking on my statement I now have a rolling charge and interest each month I have spoken to Tesco and been informed that this will not get paid off until all my other balances are clear  even if I overpay this will not be put against this balance it's gone from 40p to £158  and I get £1.99 interest every month does anyone else understand this

blue.peter

I'm not familiar with the specifics of the Tesco card, but hope that some general comments will help.

Credit card issuers allocate payments to charges in a specific order, and that order isn't always what you might expect.You need to check the Ts & Cs applicable to the card. These'll set out the order in which payments are allocated to outstanding debts.

You might find something about this on your statement. However, if your statements are anything like mine, they'll just say something not terribly helpful in the present context. For example, my Nationwide statement just says "We allocate payments to balances which show on your current statement in a high to low interest rate order, then, to balances in a high to low interest rate order which
do not yet appear on your statement." However, the statement also includes an interest summary box, which sets out the interest rates applicable to purchases, balance transfers and cash advances. (As it happens, those are all the same for me.) TSB says something similar, but adds "See section 6.1 of the terms and conditions for full details."

The relevant TSB condition looks like this:

If you still don't understand, I'd suggest asking the card issuer for a full written explanation, including the calculation used to determine the amount of interest charged on your last statement. If that still doesn't get you anywhere, you might make a complaint.

blue.peter

PS: I've just looked at my MBNA credit card Ts & Cs. They include some helpful examples. One of them is this:

In other words, interest is the last thing that gets paid off, after new purchases. So if you don't pay in full, interest will get charged on previous interest as well as any new purchases not paid in full. I suspect that this is what's happening with your Tesco card.

Ebe_Scrooge

Late payments from a few years ago will not, in and of themselves, incur interest.  But the bottom line, for any credit card, is that if you do not clear the balance in full, you'll be charged interest on the full balance (not just the portion remaining).  So if your statement balance is £1000 and you pay £999, you'll be charged interest on £1000 for that month.  Standard practice for any credit card.

amhanna

Thanks for all the comments but the interest each month on the statement is £1.99 which is paid each month Tesco do not use any of the overpayment to clear this other balance which is separate  to spending interest on the card their explanation is that when all the other parts of the card are paid this will then start to be cleared. If anyone is with tesco can has the same situation have a look at the statement and question the other in the interest box.  

Ebe_Scrooge

Please can you clarify the situation. Initially you said you have a "rolling charge" - what do you mean by this?

Making a big assumption here - I'm guessing you started out with a low-rate balance transfer onto the card, and have since been spending on the card?  If that's the case, it kind of makes sense.  Payments are allocated in a specific order, which will be explained on the statement.  But the most usual scenario is that any payment is allocated to the highest-rate debt first.  So I'm guessing that when you make a payment, it gets allocated to new purchases first, as they're likely to be at a higher APR.  Then the remainder is allocate to the original BT amount.

If this is the case, then it sounds correct - the only way to stop paying interest would be to clear the whole statement balance.  Although a fixed amount of £1.99 each month does sound a bit odd - I'd expect it to gradually reduce as the capital is reduced.

If I've misunderstood, then if you can give some more details about the various balances, I can try an explain a bit more fully.

amhanna

This is Tesco credit card at its best I will try and put it as simply as possible as I have a hard time with the Tesco customer service reps explanation I have a balance transfer which has interest applied it is the highest interest so gets the money first |I understand this I have a very small amount of spending which I again understand has interest applied, but at the bottom of my statement in the section other^ there is now £158 which has interest applied every month of £1.99 this is also at the same interest rate as the balance transfer, but even with over payments nothing  reduces this. Looking back at my statements for 2019 this stood at 0.40p attracting no interest. I became ill and missed some payments sending a £12+ charge on the account. Now this is where it gets muddy according to the rep these charges are what the section other^ on the statement are so it is now standing at £158 this is what I mean by a rolling charge as instead of going down it is going up and up. The rep has told me that this will only get paid off when the highest interest rate balance is cleared. Putting it simply Tesco have lumped it together on the main part of the statement but are not really letting me make any inroad on the breakdown sums. I had not expected to be charged interest on my missed payments separately lump it together and charge me a set amount as usual and overpayments brings it all down. I am not trying to be patronising but I'm sure there is a flaw to this way of Tesco banking? The help is much appreciated if you can get your head round I'm still confused and considering talking to the financial ombudsman to see if they can clear the mud. Thanks

ItsComingRome

amhanna said:

This is Tesco credit card at its best I will try and put it as simply as possible as I have a hard time with the Tesco customer service reps explanation I have a balance transfer which has interest applied it is the highest interest so gets the money first |I understand this I have a very small amount of spending which I again understand has interest applied, but at the bottom of my statement in the section other^ there is now £158 which has interest applied every month of £1.99 this is also at the same interest rate as the balance transfer, but even with over payments nothing  reduces this. Looking back at my statements for 2019 this stood at 0.40p attracting no interest. I became ill and missed some payments sending a £12+ charge on the account. Now this is where it gets muddy according to the rep these charges are what the section other^ on the statement are so it is now standing at £158 this is what I mean by a rolling charge as instead of going down it is going up and up. The rep has told me that this will only get paid off when the highest interest rate balance is cleared. Putting it simply Tesco have lumped it together on the main part of the statement but are not really letting me make any inroad on the breakdown sums. I had not expected to be charged interest on my missed payments separately lump it together and charge me a set amount as usual and overpayments brings it all down. I am not trying to be patronising but I'm sure there is a flaw to this way of Tesco banking? The help is much appreciated if you can get your head round I'm still confused and considering talking to the financial ombudsman to see if they can clear the mud. Thanks

You're carrying a balance and are spending on the card,  That is why you're accruing interest.

Stop spending on the card and don't bother the FOS with this non-issue.

kuratowski

Use two separate cards, one for spending and one for carrying the borrowed balance.

molerat

What item(s) on the statement equates to the amount this "Other" increases by each month ? The amount cannot increase without a corresponding entry on the main body of the statement.  I think it could only be for returned / failed payments or cash / cash like transactions as any other fees are "default fees" and are paid off in the minimum payment.

amhanna

I have not used this card for anything in 4 years