When Does Interest Stop if I start paying in Full

Nasqueron

I vaguely remember (going back 20 years!) having this conversation with Halifax, I think I paid interest for something that was treated as cash, don't remember the details and it was cleared in full including the interest the next month, then they charged again and couldn't explain why (though I know now it was correct) and they waived it for the second month as it was very small amount!

eskbanker

Superhoopza said:
It goes back to my point above where I have a chat transcript with them asking if I will be charged interest in February, should I make my full balance payment on 01/02/2024 to which they said a definitive no. It's them getting it wrong more than likely but I'll challenge it if its a decent amount. They'll probably say sorry for the misunderstanding and then refer me to my credit agreement. 

Was the exact situation fully explained in that chat, i.e. was it clear to all parties that this would be the first month you'd paid in full on time and have been carrying a balance before that?

Superhoopza

CliveOfIndia said:

Superhoopza said:

=

It goes back to my point above where I have a chat transcript with them asking if I will be charged interest in February, should I make my full balance payment on 01/02/2024 to which they said a definitive no. It's them getting it wrong more than likely but I'll challenge it if its a decent amount. They'll probably say sorry for the misunderstanding and then refer me to my credit agreement. 

You have to appreciate that most Customer Service reps, whilst in the main doing a great job, are not qualified accountants who understand every little nuance of how credit card interest works.  Trailing interest, in particular, can be a bit of a tricky one to get your head around.

Of course you could try, and you may very well get the trailing interest waived as a good-will gesture.  Having said that, it's going to be a very small amount anyway - something in the order of a few pence to a couple of quid, depending on the balance you were carrying before clearing it.

I would expect someone working in customer services of a loan and credit card company to understand that. You don't need to be a qualified accountant to do so.

The balance was just under £4,000 so unfortunately won't be a few pence. Not sure how the timings will work and from what date until when it will charge interest.

molerat

You want to argue technicalities ?

The CS rep was correct.  If you pay it all off on 1st Feb you will not be charged interest in Feb, interest stops being charged from the date you pay it all off. You will though have interest shown on your Feb statement, Interest that was accrued in January up until the date you paid it off.

simax

Just to throw a curveball in - I was in a position to pay off several credit/store cards in December that were carrying substantial balances…. Some charged trailing interest the following month in January, some didn’t surprisingly….

Creation - no
Barclaycard - yes
Nationwide - no
Zopa - no
Asda card - yes
Vanquis - no
PayPal Credit - no

Statement dates were almost identical… and the statements in January proved this. So not sure why that happened…?

Superhoopza

simax said:

Just to throw a curveball in - I was in a position to pay off several credit/store cards in December that were carrying substantial balances…. Some charged trailing interest the following month in January, some didn’t surprisingly….

Creation - no
Barclaycard - yes
Nationwide - no
Zopa - no
Asda card - yes
Vanquis - no
PayPal Credit - no

Statement dates were almost identical… and the statements in January proved this. So not sure why that happened…?

Thanks for this. My provider isn't in that list so I'll just wait and see.

elkiedee

So if you paid your minimum payment/anything other than the full amount for your December statement by the deadline of 4 January and settled the bill in full on 9 January, you will be charged interest on that statement, at the applicable rate each day on the amount owed from the date of the last statement (ie in December I think). 

For 4 February, check the small print on the back of the statement whether the payment on 1 February in the form you pay it will be fully cleared, because 2-3 Feb is the weekend so it's only one working day, and you may have a time deadline to pay on Friday 1 February too. I noticed this when checking my own accounts and realising that my two of my credit cards treat interim payments quite differently. If your payment will definitely be cleared/credited by 4 February then you shouldn't have more interest to pay, but the deadlines are a bit close. Still, the fact that you cleared your balance in January (though after the due date) should keep interest on the next statement down. 

Superhoopza

elkiedee said:

So if you paid your minimum payment/anything other than the full amount for your December statement by the deadline of 4 January and settled the bill in full on 9 January, you will be charged interest on that statement, at the applicable rate each day on the amount owed from the date of the last statement (ie in December I think). 

For 4 February, check the small print on the back of the statement whether the payment on 1 February in the form you pay it will be fully cleared, because 2-3 Feb is the weekend so it's only one working day, and you may have a time deadline to pay on Friday 1 February too. I noticed this when checking my own accounts and realising that my two of my credit cards treat interim payments quite differently. If your payment will definitely be cleared/credited by 4 February then you shouldn't have more interest to pay, but the deadlines are a bit close. Still, the fact that you cleared your balance in January (though after the due date) should keep interest on the next statement down. 

Thank you for breaking it down.

The Feb payment is actually due 1st of Feb looking at my account but my direct debit is set to take the full statement so I'll be arguing with them if anything happens that means the payment doesn't cover the balance in time.

eskbanker

elkiedee said:

For 4 February, check the small print on the back of the statement whether the payment on 1 February in the form you pay it will be fully cleared, because 2-3 Feb is the weekend so it's only one working day, and you may have a time deadline to pay on Friday 1 February too.

1 February is Thursday, not Friday!

Superhoopza

Relax it's the direct debit on the timeframe that is taken every month from them and I have never missed a payment.