Tesco Credit Card Payments

ChrisJ4839

Hi all,

I'll get to the point:

I took out a credit card with Tesco for a cash advance, interest free. Where able, I paid more each month than the minimum but am left with £9014 at the end of the term.

My payment have always been 1% of the balance (Plus my own overpayment). My last payment before the term ended was £90.00

This month, £195 Interest has been applied (Which is fine) but the payment is £396? Also, the statement says I will be paying £203 in Interest alone next month if I only pay the minimum balance off??

The statement states:
"Minimum payment summary - the greater of
the total of: (a) all interest and default fees charged +
1% of your new balance + any arrears carried over
from your last statement"

So surely, £9014+£195.20=£9119.82. So surely my minimum payment should be £195+1% which is ~£285??

I called Tesco and they just keep saying "It's right" without any explanation. There is also nothing I can see in the statement which indicates why the payment is so high?

Furthermore, they're stating next month it'll be even more interest, despite paying £195 interest plus £201 balance off this month? (Based on the £396!)

Am I losing the plot (Fine if that is indeed the case) or do Tesco use Horizon software??

Thanks in advance for any help understanding this.

Mark_d

This month you pay 195 in interest.  Next month it is 203.  Perhaps that is because July is a longer month?

It looks like you are being charged "Double the total of all interest and default fees charged on your statement, plus £5, plus any arrears carried over from your previous statement" - Does this statement appear in your T&Cs?

Ergates

Mark_d said:

This month you pay 195 in interest.  Next month it is 203.  Perhaps that is because July is a longer month?

It looks like you are being charged "Double the total of all interest and default fees charged on your statement, plus £5, plus any arrears carried over from your previous statement" - Does this statement appear in your T&Cs?

This is to avoid customer falling into the Persistant Debt criteria - which is when a customer pays off more interest  & fees than balance over a rolling 18 month window.  To prevent that happening, a lot of card suppliers set up the minimum payment as you've described.

ChrisJ4839

Hi Mark. Exactly, this is how my maths are adding up as well but /Tersco are insisting it's correct but without any exp[lanation. They can't seem to understand £195 +1% of "9114 does NOT equal £396.

The £203 is even more astonishing as my balance, based on deducting the £201 (Deducted from the £396) would surely mean my interest should be lower.

From the statement:
"Minimum payment summary - the greater of
the total of: (a) all interest and default fees charged +
1% of your new balance + any arrears carried over
from your last statement; or (b) £25 + any arrears
carried over; or (c) the amount you owe over your
credit limit including any over limit fees; or (d) double
the total of all interest and default fees charged + £5
+ any arrears carried over."

I have no arrears or charges listed, just the £90 from last month and the £195 interest

(Following is Copy/Paste from statement)

Previous balance £ 9,014.00
Payments in £ 90.00 CR
Spending plus any adjustments £ 0.00
Fees £ 0.00
Interest £ 195.82
New balance £ 9,119.82

Payment due 20 June 2024
Minimum payment £ 396.00

ChrisJ4839

@Ergates - Understood but should this not be detailed in the statement where it says "1% plus interest" etc....

Ergates

OP - What is the statement date and what date does your interest free offer end?   If they don't overlap exactly, then the first payment might be a partial ChrisJ4839 said:

The statement states:

"Minimum payment summary - the greater of
the total of: (a) all interest and default fees charged +
1% of your new balance + any arrears carried over
from your last statement"

That (a) there implies there was a (b) too - possibly more.

And the first sentence states "the greater of the total of"    So if there is a (b) and if that comes out as more then that's what they'll use as the minimum.

ChrisJ4839

@Ergates (Full text). Summary states (A) OR (B) OR (C). I always paid minimum by DD so never any "fee's or late charges". Was used for one thing and one thing only: Cash advance. Paid a bit off.

Minimum payment summary - the greater of
the total of: (a) all interest and default fees charged +
1% of your new balance + any arrears carried over
from your last statement; or (b) £25 + any arrears
carried over; or (c) the amount you owe over your
credit limit including any over limit fees; or (d) double
the total of all interest and default fees charged + £5
+ any arrears carried over.

mr_stripey

needless to say this was always going to be a very expensive borrowing option if you could not pay back the entire balance in the interest free period.

ChrisJ4839

@mr_stripey - I don't disagree and I'm not disputing the interest or any reasonable charges. I guess I was after confirmation that I'm reading it correctly based on the "Minimum payment summary" and it seems not to add up. Interest (£195) + 1% of the New Balance (£9119.82=£91.20) should mean a payment of £286.20.

Furthermore, the customer support could not explain it either, just kept saying "I've been told it's correct by my manager". The CS Rep couldn't actually explain it, hence asking on here for opinions.

Ergates

ChrisJ4839 said:

Minimum payment summary - the greater of
the total of: (a) all interest and default fees charged +
1% of your new balance + any arrears carried over
from your last statement; or (b) £25 + any arrears
carried over; or (c) the amount you owe over your
credit limit including any over limit fees; or (d) double
the total of all interest and default fees charged + £5
+ any arrears carried over.

This is the calculation being used because it is greater than option a.

ChrisJ4839

@Ergates I see where you are coming from but that means 2 X £195 which is £390+ £5 but then I assume that the 2nd lot of interest is paying off the debt itself at a rate of £195 per payment +£5.

Doesn't seem to explain why next month is £8 more? (It actually won't be as I paid £650 off after the statement date and will be paying another £2000 off next week but for now, I'll go with it).

Never had payments jump like this before but as @mr_@mr_stripey said, not best use of my financial resources so I'll be prioritising this to be paid off. Was hoping tpo ay £400 as standard and overpay each month as available but hey, lesson learned.

Thanks to alll those who have engaged with me for this. Your time is appreciated.