I paid off my Barclaycard purchases 6 days after statement, BC says it was "late"

Alex9384

So, I was charged interest on my Barclaycard, for the first time in my life. Luckily only £3.26, now refunded, but the question is why?

I currently have a Money Transfer balance (over 7k) on my Barclaycard with 0% promotional rate till 2023.

I regularly do some purchases on this card, around £220 per month, which is currently the typical minimum payment amount.

The idea is that I don't have to pay off the money transfer balance yet (apart from minimum payments, obviously), so I make new purchases that equal to the minimum payment, then wait for statement, then pay the standard balance off, which takes me back to the balance (roughly) where I was the previous month.

It worked fine, but on my last statement from February I was charged interest of £3.26 (at 1.4808%) which equals to interest on £220 in one month. How it could happen?

Here are the data:

Statement 26 January

Your new balance:  £7,477.25
Minimum payment:  £224.31

Please pay by:    21 February 2022

Your activity

Your previous balance:   £7,479.21

Payments towards your account:  £230.41

Your new activity:  £228.45

Interest charged: £0

Other charges:  £0

Payments towards your account

09 Jan Payment  £220.00

17 Jan Payment by Direct Debit £4.37

21 Jan Payment  £6.04

"New activity" (228.45) are the new purchases I made between 27 Dec and 23 Jan.

OK, so this was January statement. Now let's look at the next month:

Statement 23 February

Your new balance:  £7,419.91
Minimum payment:  £222.31

Please pay by:    21 March 2022

Your activity

Your previous balance:   £7,477.25

Payments towards your account:  £224.31

Your new activity:  £163.71

Interest charged: £3.26

Other charges:  £0

Payments towards your account

01 Feb Payment  £220.00

21 Feb Payment by Direct Debit £4.31

So here, March dates are irrelevant. But as you can see, I paid £224.31 in total which was the minimum payment required on the 26 January statement. First I manually paid £220 (from Halifax Reward) just six days after statement. The remaining direct debit of £4.31 was taken twenty days later by Barclaycard. So I paid £220 much earlier than required and then I was charged interest on those £220 for the whole month. Funny thing is Barclaycard CS representative said the £220 was paid late and £4.31 was on time. What the heck? How can you pay late just six days after statement and then direct debit 3 weeks later is "on time"?

Here's what they wrote:

I have processed the refunds of 3.26GBP

Your minimum payment will remain at 0 GBP which is due by 21/03/22     (I already paid £230 on 01 March, that's why 0 GBP)

Your statement of 26/1/2022 advised that payment was to reach us by 21/2/2022. The full payment due was 7477.25

4.31 received on time on 21/2/2022.

220.00 received late on 1/2/2022 hence it was considered as partial payment and interest was charged.

There is no need to worry as I have taken care of it for you now.

I don't understand 2 things here.
First, why they consider something a "partial payment" and start charging interest on it before the payment due date?

And second, why did he say the 220.00 was received late?

SuperAllyB

I don't understand their explanation, and I suspect their customer service representative didn't understand the situation either.

The way I see it is that your February payments of £224.31 hasn't quite covered your January spending of £228.45 and you have been charged interest on that full amount due to not clearing the purchases in full.

Ebe_Scrooge

Alex9384 said:

Your new activity:  £228.45

Payments towards your account:  £224.31

It's a little confusing to follow, but my interpretation is that you spent £228.45, and paid £224.31.  Since you failed to repay the full balance (ignoring the MT aspect of things), then you were charge interest on the full £228.45 - which would be correct.

That's kind of backed up by where it says:

01 Feb Payment  £220.00

21 Feb Payment by Direct Debit £4.31

So you made a manual payment of £220, then later that month a DD was taken for £4.31.  So the total payment taken equated to the minimum payment required (which is comprised of part of the MT amount and part of your new spending).  Since you didn't pay the "full amount" of your new spending, you were charged interest on it.

Alex9384

Ebe_Scrooge said:

It's a little confusing to follow, but my interpretation is that you spent £228.45, and paid £224.31.  Since you failed to repay the full balance (ignoring the MT aspect of things), then you were charge interest on the full £228.45 - which would be correct.

That's kind of backed up by where it says:

01 Feb Payment  £220.00

21 Feb Payment by Direct Debit £4.31

So you made a manual payment of £220, then later that month a DD was taken for £4.31.  So the total payment taken equated to the minimum payment required (which is comprised of part of the MT amount and part of your new spending).  Since you didn't pay the "full amount" of your new spending, you were charged interest on it.

Yes, that must be it.

However, I still don't understand the logic behind it. I pay interest on the amount I paid way before the due date? Just because I paid minimum? If I paid 225 instead of 224, then I wouldn't be charged any interest? It's strange.

And the thing with "late payment", that must be the CS representative's confusion because it doesn't make sense.

Btw, it is indeed a bit confusing to follow but that's how things appear on BC statements. I just copied them here.

surreysaver

You either pay it all off, or you pay interest on the whole lot of purchases. Its the way it is.
The usual advice is don't mix balance/money transfer and purchases on the same card to prevent these issues.

cx6

The way to look at it is this.

When you spend on a credit card, you are charged interest from day one for each transaction - the day you bought the item.

Every month you are then a statement, and a request to pay at least the minimum before a specified payment date. Interest on your purchases is still being added each day.

Come the payment date - unless you pay the statement balance IN FULL, the total interest racked up will be added. If you pay in full, the interest is 'forgotten' thus giving you the well-publicised 'interest free period'.

Alex9384

surreysaver said:

You either pay it all off, or you pay interest on the whole lot of purchases. Its the way it is.
The usual advice is don't mix balance/money transfer and purchases on the same card to prevent these issues.

Actually, mixing the two balances is not a problem. I asked them before I started doing that, they said they keep it separated and all payments always go towards balance with highest interest rate. In this case towards regular purchases. On the statement I see what is the money transfer balance and that it's still on promotional rate. Regular spending is separate from that.

Nevermind, this month I paid just a couple quid over the minimum payment, so no interest should be applied. Hopefully, it won't be considered late, since I paid it just few days after statement. 

SuperAllyB

Going by your figures above you'll be fine this month as your minimum payment is more than your new activity.  The important bit to avoid paying interest on purchases in future is paying at least as much as any new activity.

born_again

Just remember you may well have a bit of trailing interest over the next couple of months.

surreysaver

Alex9384 said:

surreysaver said:

You either pay it all off, or you pay interest on the whole lot of purchases. Its the way it is.
The usual advice is don't mix balance/money transfer and purchases on the same card to prevent these issues.

Actually, mixing the two balances is not a problem. I asked them before I started doing that, they said they keep it separated and all payments always go towards balance with highest interest rate. In this case towards regular purchases. On the statement I see what is the money transfer balance and that it's still on promotional rate. Regular spending is separate from that.

Nevermind, this month I paid just a couple quid over the minimum payment, so no interest should be applied. Hopefully, it won't be considered late, since I paid it just few days after statement. 

I realise the two balances are separate on your statement, however I think you have misunderstood my post. Because you are mixing the balances, unless you are on top of the situation, it will be prone to people making errors due to a lack of understanding of how it works, as has occurred in your example.
And I expect you will have a small amount of interest this month, and possibly next month as well, as the balance of purchases will still be on your card until the date the payment has been made.