Interest Payment on M&S Card

GSP

Hi,

Our next payment is due on the 1st April.

Our current outstanding balance is £5.9k, with the payment by the 1st at c£4.5k.

If we don’t pay the full £4.5k, will the interest charged depend on how much money we do pay?

For an e.g., if we paid £4.4k, would we get charged interest on the £100 we didn’t pay, or get charged interest for the full £4.5k.

Hope this makes sense.

Thank you.

MrFrugalFever

You will need to check your terms and conditions but generally interest is calculated daily and then applied on the full statement amount after the statement payment due date UNLESS paid in absolute full. You making a token payment will not change the already calculated interest for the previous statement but will reduce it ever so slightly for the next one.

Try not to carry a balance on a credit card, it is easily the most expensive way of borrowing, can you pay in full? Can you BT to a 0%? (be careful of fees and do your sums!).

Brie

as I recall they do say on their T&Cs that interest is calculated on the daily balance so the sooner you pay to them the less you will be charged.  What I don't recall is whether they backdate interest calculations to the date of purchase or not so potentially you may be charged the 22% (or whatever) on the various increasing balances over the last month and then the reduced amount after you pay a lump sum to them.  

I was also surprised to find that they don't always take the DD despite their T&Cs stating they always would.  They didn't claim one in Feb on our card as we'd paid a large amount on to the card due to a very large charge going on it.  So despite us still owing them money no DD was taken.  They claim it's all ok as I wasn't charged any interest but it did muck up my accounting.

Sarahspangles

Statements usually give an ‘estimated interest’ figure which tells you what the interest will be if you only pay the minimum.

GSP

Brie said:

as I recall they do say on their T&Cs that interest is calculated on the daily balance so the sooner you pay to them the less you will be charged.  What I don't recall is whether they backdate interest calculations to the date of purchase or not so potentially you may be charged the 22% (or whatever) on the various increasing balances over the last month and then the reduced amount after you pay a lump sum to them.  

I was also surprised to find that they don't always take the DD despite their T&Cs stating they always would.  They didn't claim one in Feb on our card as we'd paid a large amount on to the card due to a very large charge going on it.  So despite us still owing them money no DD was taken.  They claim it's all ok as I wasn't charged any interest but it did muck up my accounting.

It’s pretty complicated.
Say if I paid £500 as soon as I received my statement, which was over the minimum payment, does that mean I would hardly pay any interest come the balance due date, or still get hit whether I had paid the £500 the earliest I could, or the latest?

daveyjp

Interest starts to be accrued as soon as you spend on the card as at that point you are borrowing money.

Spend £1,000 on first day of statement period and you will incur 30 days interest on that £1,000 (monthly interest rate will be on your statement/agreement).

Pay off £1,000 in full and no interest is paid,  pay off £999 and the 30 days interest plus the £1 is carried forward and interest starts to be accrued on the £1 plus the interest to be paid the next month.

CliveOfIndia

daveyjp said:

Interest starts to be accrued as soon as you spend on the card as at that point you are borrowing money.

Spend £1,000 on first day of statement period and you will incur 30 days interest on that £1,000 (monthly interest rate will be on your statement/agreement).

Pay off £1,000 in full and no interest is paid,  pay off £999 and the 30 days interest plus the £1 is carried forward and interest starts to be accrued on the £1 plus the interest to be paid the next month.

This is spot on.  It's something that can catch a lot of people out, making the assumption that if they pay the majority of the balance then they'll only be charged interest on the remaining portion.  Actually you'll pay interest on the full balance, though each transaction accrues interest on a daily basis - so the amount of interest you'll pay on each individual transaction will differ, depending on the date of the transaction in relation to your statement cycle.

Mr.Generous

daveyjp said:

Interest starts to be accrued as soon as you spend on the card as at that point you are borrowing money.

Spend £1,000 on first day of statement period and you will incur 30 days interest on that £1,000 (monthly interest rate will be on your statement/agreement).

Pay off £1,000 in full and no interest is paid,  pay off £999 and the 30 days interest plus the £1 is carried forward and interest starts to be accrued on the £1 plus the interest to be paid the next month.

Yes, I made this mistake once accidently paying off the wrong sum by about £10 I think. Interest was charged on the whole balance, I rang up and they explained it, then as it had never happened before they waived the charge. Sometimes it pays off to call them.

GSP

Thanks all for your comments.