Charged £74.27 interest by Virgin Money Credit Card for underpaying by less than £8 !!!!!!!!!!

Bollard

Hello All, 

I have got one credit card from Virgin Money, which I've had since July 2022. I have always paid the balance off in full, so I was surprised this month to get an interest charge of £74.27. Over the last six months I've used their instalment service to pay a large car bill. So last month I paid the final instalment, the fee for the instalment and my usual monthly spending. I must have messed my calculations up a bit cause I ended up paying about less than £8 than the total owed for last month. 
I've contacted Virgin Money and the person said I've been charged interest on the whole amount, as I did not pay the balance back in full. This doesn't seem correct to me, I thought you got charged interest on the balance left outstanding, not the whole balance. 

Is this the only credit card that does this or do they all do this now? I'm sure when I've had credit cards before, you only got charged interest on the balance left outstanding. 

This miserable experience has left a sour taste in my mouth, so I will be closing my Virgin Money credit card.  

Cheers 

Mark 

Niv

This is exactly what Martin Lewis says on his show every time he discusses credit cards - you get charged the interest on the full balance unless you pay it off in full. So this is not a virgin thing, it would apply to (I presume) all credit cards. 

eskbanker

This subject comes up fairly regularly on here and unfortunately they're simply following the same process that all credit card companies do.

Interest is accrued based on the balance at the end of every day, and is only waived if you repay the full balance by the due date.  The reduced balance after a partial repayment will generate lower interest from that point onwards (so you'll have some trailing interest added next month too), but the interest associated with all the transactions on the statement that you failed to repay in full was still payable, for the period leading up to that statement date.

born_again

ALL CC would charge the same. 
Pay the £8 asap & interest next month will be very small.

Over the last six months I've used their instalment service to pay a large car bill.

So you mean 6 months interest free purchase?

Kim_13

They all do it. Interest is being charged from the day the purchase is made, it’s just that they waive it if it is paid in full by the due date. So they’re not actually charging interest on the amount that has been repaid, as it was still outstanding for several weeks at a minimum before it was paid. 

I don’t think it should be this way - the way you’ve understood it is to me the logical way - as it’s not like they ever show the interest charged and then show a credit for the same amount described as an interest waiver for paying in full. 

They are legally correct, unless something they’ve done wrong was the cause of the wrong amount being paid. Are you sure it was human error on your part? With that being said, I’m surprised they haven’t offered something as a gesture of goodwill as the interest charged is 10x the amount that was left outstanding. Most will do something for a ‘first offence.’ 

If the error was yours, don’t mix different types of spending on the same card, as this was likely the root of it. Have one for instalments and keep your usual monthly spending separate. 

MorningcoffeeIV

Bollard said:

This miserable experience has left a sour taste in my mouth, so I will be closing my Virgin Money credit card.  

You'll be left with no credit cards at all if you take that approach to being charged interest on the money you borrow.

At least now you're aware of how your card works - so keeping it would be wiser, having already paid for the lesson.

mebu60

Given that all credit card providers operate in this way, rather than closing the Virgin card perhaps set up a direct debit so that they take the full amount due each month rather than you attempting to calculate it and getting it wrong? 

As @born_again says, you need to pay the outstanding £8 asap to reduce the tail on the interest into next month. 

cymruchris

Bollard said:

Hello All, 

I have got one credit card from Virgin Money, which I've had since July 2022. I have always paid the balance off in full, so I was surprised this month to get an interest charge of £74.27. Over the last six months I've used their instalment service to pay a large car bill. So last month I paid the final instalment, the fee for the instalment and my usual monthly spending. I must have messed my calculations up a bit cause I ended up paying about less than £8 than the total owed for last month. 
I've contacted Virgin Money and the person said I've been charged interest on the whole amount, as I did not pay the balance back in full. This doesn't seem correct to me, I thought you got charged interest on the balance left outstanding, not the whole balance. 

Is this the only credit card that does this or do they all do this now? I'm sure when I've had credit cards before, you only got charged interest on the balance left outstanding. 

This miserable experience has left a sour taste in my mouth, so I will be closing my Virgin Money credit card.  

Cheers 

Mark 

As has been mentioned it's the way credit cards work, always has been the same. There have been occasions though where customers who fall for it for the first time make a written apology requesting a refund of the interest as a gesture of goodwill and have been successful. That might be worth trying for the price of (an overly expensive) stamp. I wouldn't close the account yet until I'd tried this, and even then I likely wouldn't close it, as that's how credit cards work. I can understand that it did leave a sour taste though, but sadly as you say it was your calculation error that led to it. If you do decide to write, come back and let us know how you got on.