0% CREDIT CARD - WHY HAVE I BEEN CHARGED INTEREST?

JulieDH

Hello,

Can somebody please help me?  I had a Sainsbury's 0% credit card for 22 months and the 0% interest period ended in December.  I paid the minimum payment every month including December then two days later I paid off the balance and closed the account.  Today I have been sent a letter stating that I owe £1.10 which is listed as interest charged - 26th January 2023.  I know it is only a small amount of money but I don't understand why I have been charged and I can't get access to my account online as it has been closed.  Thank you in advance.

cymruchris

Were you paying by direct debit for your minimum payments?

I'd guess that if you made your 'big final' payment two days after your direct debit was taken - that direct debit date was the end of the promo - and the interest you are being charged is for between that date and the two days later when you called up to make that final payment.

MorningcoffeeIV

You probably paid the final sum after the promo had ended in December.

Either that or you'd put a purchase on there.

CliveOfIndia

I suspect this is a timing issue.  Essentially you have to clear the balance in full before the promotional rate expires.  If you paid the minimum in December, just before the promotional rate expired, then when it expired you still had a small balance - which would start accruing interest until you repaid it.

Check the exact dates of when the promo expired, when you made December's minimum payment, and when you paid the balance in full.  But in all likelihood, I suspect this is what's happened - you inadvertently carried a balance for a short period of time after the promo expired.

eskbanker

Was the final payment before the expiry of the 0% period?

JulieDH

I assumed after the 0% interest period had ended it would become just like a normal credit card and I wouldn't get charged interest if I paid off the balance IN FULL as Martin Lewis says?  Is this not the case?

MorningcoffeeIV

Yes, but IN FULL includes all promotional balances as well.

JulieDH

cymruchris said:

Were you paying by direct debit for your minimum payments?

I'd guess that if you made your 'big final' payment two days after your direct debit was taken - that direct debit date was the end of the promo - and the interest you are being charged is for between that date and the two days later when you called up to make that final payment.

Yes I was but I assumed the credit card then became just like an ordinary credit card and as long as I paid it in full I wouldn't get charged any interest.

cymruchris

JulieDH said:

I assumed after the 0% interest period had ended it would become just like a normal credit card and I wouldn't get charged interest if I paid off the balance IN FULL as Martin Lewis says?  Is this not the case?

Yes - but you hadn't paid it IN FULL by the last payment due date of your promo period by the sound of it. You'd have had to have paid IN FULL by the time that last direct debit dropped. So in effect you've paid 2 days interest on your remaining balance after that last promotional period direct debit was taken.

I imagine your promo period ended with your final statement - tied in to your last 'due date' - you paid the direct debit on the due date - and until that point you stayed completely interest free.

From midnight that day, any remaining balance would begin to accrue interest as it wasn't fresh spend, it was an old, now interest bearing balance.

To clarify it you can give them a call - but I imagine this is what they'll say.

AmityNeon

JulieDH said:

I assumed after the 0% interest period had ended it would become just like a normal credit card and I wouldn't get charged interest if I paid off the balance IN FULL as Martin Lewis says?  Is this not the case?

Yes, but your December direct debit payment wasn't for the full amount was it? What was the end date of the 0% interest period?

If you were only making the minimum payment, there were likely historical transactions accruing 0% interest for many months. As soon as the 0% interest period finished, those historical transactions started accruing interest immediately. A 'normal' credit card usually allows an interest-free period, but only for new purchases after the last statement date, and only providing the last statement was paid off in full.

JulieDH

AmityNeon said:

JulieDH said:

I assumed after the 0% interest period had ended it would become just like a normal credit card and I wouldn't get charged interest if I paid off the balance IN FULL as Martin Lewis says?  Is this not the case?

Yes, but your December direct debit payment wasn't for the full amount was it? What was the end date of the 0% interest period?

If you were only making the minimum payment, there were likely historical transactions accruing 0% interest for many months. As soon as the 0% interest period finished, those historical transactions started accruing interest immediately. A 'normal' credit card usually allows an interest-free period, but only for new purchases after the last statement date, and only providing the last statement was paid off in full.

Thank you I understand now, you have explained it very clearly.  I have never had one of these cards before and didn't understand how they worked after the interest free period was up.