Cash interest repayment

Bobbybob55

I lost my debit card in the lead up to Christmas and knew I would need some cash for a few outings and presents, so I withdrew a lot of cash from my credit card (more than I actually needed) and made a repayment to my card to cover the whole amount. I made the repayment pretty quickly because the terms of the card say interest on cash starts from day one, the terms also say the repayment will pay off the higher interest items first - in my case it is the cash as the rest of the balance is at 0% for the next 12 months. 

However when I got my statement I noticed I had incurred much more interest than I expected and the repayments had been made against the 0% items, while my cash balance was the full amount I had withdrawn in December. If I only make min payments going forward I’ll pay £500+ interest on this cash balance over the next 12 months. 

When I asked why the repayment didn’t come off of the cash balance, I was told it was because I made the payment too early and should have waited for it to be “statemented”. The first two people I spoke to (in the credit card team) weren’t particularly aware of this as they had to send the query to someone else to look at and phoned me back. 

When I said “ah I thought because I’m paying interest from day one that it would pay against the cash balance, when i decided to withdraw cash I did read up on the cash terms and charges but didn’t spot that, where did I miss it?”

But… at the moment they seem to be telling me it isn’t written anywhere and I should have just *known* (unless the person I spoke to is wrong). So I’m wondering is this standard for credit cards and was I being dumb for not realising? Maybe I should have known but still feels like something that should be in the terms.

If I’d made the repayment a week later I’d still have paid the same interest for the cash that month but also now not be facing an extra £500+ of interest going forward (depending on how quickly I get the balance paid down).

MorningcoffeeIV

It'll definitely be in the terms that payments go to statemented transactions first. It's standard.

Have a look at your agreement under 'payments'.

maisie_cat

The only time cash withdrawals avoid interest is a card that had no balance to start with. 

Bobbybob55

MorningcoffeeIV said:

It'll definitely be in the terms that payments go to statemented transactions first. It's standard.

Have a look at your agreement under 'payments'.

Thanks. Yeah I’ve read a section that I think covers it, it doesn’t use the term statemented (which is what they have used when discussing with me and fairly obvious what it means), it uses a different term that I hadn’t interpreted as meaning just the balance on the statement. 

Seems strange multiple people in their credit card team couldn’t point me to this, they just pointed out info on the statement about highest interest first (which is actually of no relevance as it doesn’t cover this scenario).

MorningcoffeeIV

Bobbybob55 said:

MorningcoffeeIV said:

It'll definitely be in the terms that payments go to statemented transactions first. It's standard.

Have a look at your agreement under 'payments'.

Seems strange multiple people in their credit card team couldn’t point me to this, they just pointed out info on the statement about highest interest first (which is actually of no relevance as it doesn’t cover this scenario).

Not really.

The average CS agent doesn't understand how a credit card works any more than the average customer.

It's a minimum wage job in most cases 

grumbler

maisie_cat said:

The only time cash withdrawals avoid interest is a card that had no balance to start with. 

Is this true?

If the statement was £0 or paid in full, then a purchase was made, the balance isn't zero. If some cash was withdrawn then, listed in the latest transactions and payment was made, I think it goes towards the cash transaction in the first place.

Even if I'm mistaken, you can avoid interest (except, possibly, 1-2 days) by paying the current balance in full ASAP.

horsewithnoname

You could try phoning and asking nicely if they would allocate the payment to the cash withdrawal instead? They may not, but it’s worth an ask. 

Brie

Payments are supposed to go to whatever transaction is attracting the highest rate of interest.  I thought that was the law, not just something that might be in the T&Cs.  

So if you have purchases that are not attracting any interest and a cash withdrawal that is then the payment should go to the cash withdrawal.  If you have both purchases and a cash withdrawal that are not attracting any interest (yet) then a payment will go to the oldest item and work it's way forward to the most recent.

In your case since you're on a 0% for whatever reason, except for the cash withdrawal then you should point out that they are not abiding by their own T&Cs and need to correct the interest that has been charged in error.  Don't ask them and don't argue.  Just tell them what they need to do and if they don't raise it as a complaint because you have been financially disadvantaged by the error.

grumbler

Bobbybob55 said:

If I’d made the repayment a week later I’d still have paid the same interest for the cash that month but also now not be facing an extra £500+ of interest going forward (depending on how quickly I get the balance paid down).

I'm not sure I fully understand your point and your £500+ figure, but any payment you make after the next statement is produced will go towards the cash balance in the first place.

molerat

Brie said:

Payments are supposed to go to whatever transaction is attracting the highest rate of interest.  I thought that was the law, not just something that might be in the T&Cs.  

So if you have purchases that are not attracting any interest and a cash withdrawal that is then the payment should go to the cash withdrawal.  If you have both purchases and a cash withdrawal that are not attracting any interest (yet) then a payment will go to the oldest item and work it's way forward to the most recent.

In your case since you're on a 0% for whatever reason, except for the cash withdrawal then you should point out that they are not abiding by their own T&Cs and need to correct the interest that has been charged in error.  Don't ask them and don't argue.  Just tell them what they need to do and if they don't raise it as a complaint because you have been financially disadvantaged by the error.

But payments do not have to be set against transactions that have not yet appeared on a statement.

born_again

Brie said:

Payments are supposed to go to whatever transaction is attracting the highest rate of interest.  I thought that was the law, not just something that might be in the T&Cs.  

So if you have purchases that are not attracting any interest and a cash withdrawal that is then the payment should go to the cash withdrawal.  If you have both purchases and a cash withdrawal that are not attracting any interest (yet) then a payment will go to the oldest item and work it's way forward to the most recent.

In your case since you're on a 0% for whatever reason, except for the cash withdrawal then you should point out that they are not abiding by their own T&Cs and need to correct the interest that has been charged in error.  Don't ask them and don't argue.  Just tell them what they need to do and if they don't raise it as a complaint because you have been financially disadvantaged by the error.

When they are statemented.

As the cash will not be statemented till the next statement period. Any payments go towards the last statement.

This type of thing happens a lot. As well as cropping up a lot in this section.