Cash Interest payments on Credit Cards

DerbyGirl1884

Hi, 👋

I’m a newbie to the Forum so please bear with me as I’m new to all this.

I wonder if someone can explain how cash interest is calculated on credit cards please?

I have a co-operative bank credit card that I’ve had for years and I always pay the balance off every month IN FULL so never incur interest. However, I seem to have fallen foul of the never withdraw cash rule and am now being charged cash interest monthly and the call centre staff can’t tell me how it’s calculated or how many months I will continue to be charged interest for?

At Christmas I wanted to send my daughter in law some money to pay for their central heating oil and she asked me to put it into her PayPal account, so I did £664 - never thinking that my PayPal account is linked to my credit card and so in theory I was making a cash payment from my Visa card 🤦‍♀️

It wasn’t until the following month’s statement came I saw the charge for cash fee of £19.92 and cash interest of £0.47, I rang to query it to find out it was because I had in effect sent cash from my credit card, I was annoyed with myself but at least I understood the charge! There was no mention however that interest would also be charged the following month so today’s statement arrived with a cash interest charge of £11.18 so again I rang to query to be told yes it’s right, I can’t do anything about it, they don’t know how it’s calculated or for how many months I will get charged- only that hopefully it will go down each month??!! 

I have read the terms and conditions but I still don’t understand how it works! 

The statement says cash interest rates are charged at 2.071% monthly rate, annual rate 27.9%!

Has anyone else had a similar experience and if so can you please try and help me understand this and possibly how much I will end up paying in interest charges? 

Many thanks 

Carol Milner

MeteredOut

Have you fully settled the Credit Card bill, including the cash payment. Cash payments start accruing interest from the day the charge is made, until it is cleared. But if you've cleared the balance, no future interest charges should apply.

Can you check your credit card balance/statement online?

Brie

It's sometimes called trailing interest.

So you take out cash and get charged interest (& sometimes a fee as you had) from day one. The total interest for the month isn't generated until the statement comes out so even if you have paid the balance in full from the previous month you don't actually know how much you need to pay for this.

The payment you have made goes against the highest generating "purchases" and cash is likely the highest. And unpaid interest becomes a "cash purchase" basically. So some of your regular purchases you have made don't actually get cleared and now start generating interest for the whole of the statement period.

All the previous month's interest gets cleared with the next payment but there's still some interest generated so there's that bit still to be paid even if technically you have cleared all the interest and it's still just a smaller portion of a regular purchase that needs to be cleared.

Check how much interest you were charged on your last statement. If it's say £2.74 make a payment of £3 the day before your regular payment is made by DD. Hopefully this slightly higher payment will clear anything extra that is trailing on your account and you'll go back to being interest free.

The alternative is to check the balance on your account today, add a few £ and pay that amount now, way ahead of your DD. This may result in you paying your balance off twice in one month depending on how your card's full amount DDs work. Some will take a payment into account, others don't. You'll need to check your T&Cs (& even then it may not be clear)

Nasqueron

It's normally 2 months of paying the card in full

Pay it off

First month has the interest from the cash advance, pay it off in full - you could try overpaying and see but they might get shirty if the account is in credit

Second month has the trailing interest