Unfair way that Barclaycard charges interest

6 Posts
in Credit cards
I always pay my credit card bill in full each month except last month. I charged £1,064.61 to the card and paid £979.89 with a balance of £84.72 to settle this month. I was shocked to be charged interest of £20.78 - a whopping 24.53%. However, my Barclaycard's annual interest is 18.18% simple interest of 19.8% compounded. So how could it be so much money? They said they applied interest at 1.5150% which still does not come back because 1.5150% on £20.78 is a principal of £1,371.62 which is £307 more than what I charged.
Speaking with Barclaycard this morning, I discovered (and read the fine print) that they were charging me interest on the full £1,064.61 as though I had not paid anything on it. The fine print read "If your main balance and any instalment plan payments due for that month are not paid in full, interest will be charged on all items in your main balance. Interest is charged on a daily basis." If calculated on the daily balance as they said in their fine print then it is £6.40. If it is charged at the standard monthly rate then it is £13.22.
I am not shirking my debts. I will pay what I owe. What I do find to be unbelievable is that they are charging me interest on the money I already paid them as though I had not. Surely this is wrong?
Can anyone shed any light on this?
Thanks.
Speaking with Barclaycard this morning, I discovered (and read the fine print) that they were charging me interest on the full £1,064.61 as though I had not paid anything on it. The fine print read "If your main balance and any instalment plan payments due for that month are not paid in full, interest will be charged on all items in your main balance. Interest is charged on a daily basis." If calculated on the daily balance as they said in their fine print then it is £6.40. If it is charged at the standard monthly rate then it is £13.22.
I am not shirking my debts. I will pay what I owe. What I do find to be unbelievable is that they are charging me interest on the money I already paid them as though I had not. Surely this is wrong?
Can anyone shed any light on this?
Thanks.
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Replies
It's a misunderstanding on your part but you are not alone. As above, there will be some trailing interest next month too.
Interest starts accruing as soon as you borrow the money. With a credit card you borrow money as soon as you spend.
As the credit card company has lent you the money to make that purchase they expect to be paid for providing the credit facility from day one.
If you pay in full no interest is due, pay part you need to pay the interest on the money you have borrowed from the day it was lent to you.
It isn't an interest free loan on part of the credit, which is how you think it works.
Remember that normally you have over fifty days to pay back what you have borrowed, so if you spend on the card the day after the statement is produced, you have four weeks for the next statement with then another normally three weeks to pay by the payment due date. So if you then don't pay the balance in full, you are effectively charged interest on that spend for over six weeks, daily from the day you spent it. Not just a whole calendar month's interest as you seem to think.
You paid leaving a balance of £84.72, then with your thinking, how do you expect them to work out the interest on that remaining amount, what day was that money spent?