Halifax 1200% Interest charge - is this normal?

popshed

For many many years I've always paid off my main CC bill in full every month. For reasons I won't go into here I got into a little difficulty at some point so last year, with the help of this site, I started getting things back in order and I'm currently projected to celebrate my personal "having no money day" by July this year.

So last January I went with what was the best balance transfer deal at the time - the Halifax Smart Credit Card. I used the 6 months wisely and reduced the debt before dumping it off onto the Morgan Stanley 0% card last July, but once the Smart card was at zero balance I started using it as my day-to-day spending card the way I had always done with my Sainsbury's card for years. I stopped using the Sainsbury card as they had a balance transfer deal on that we've used to handle my girlfriend's debt. So I've been diligently paying the Smart card bill in full every month and not paying any interest.

That was until last month, when what with Christmas and our washing machine breaking down, and the fact I paid for the car insurance renewal up front and in full rather than by DD for a change (to save money in the longer run), I spent a little more than usual on the credit card and my payment fell short by £20. I knew about the shortfall but wasn't concerned as the interest on £20 was going to be minimal and I'd pay it off in full the following month.

I was shocked to see yesterday that I've been charged £20 in interest. That's 1200% markup!! Now I'm not completely naive, I presume there's something in the T&Cs (but honestly who reads those anyway) but I presume what's happened is following the statement date I have obviously carried on spending money on the card for the next bill and when my payment has gone in they have decided to use it to pay off my most recent payments FIRST, the ones incurring no interest, leaving the larger part of my previous statement unpaid, and it's that that has incurred the interest. To mitigate this I have immediately used my overdraft to pay off the current balance now, 2 weeks before my next statement as I can see this tactic would make it very hard to get out of paying massive interest payments indefinitely. I just don't see how they can justify this behaviour. At the time I made the payment none of the debt was incurring interest, and had I paid £20 more then it would have come off of the correct part of the debt. I seems very wrong to me and I'm going to give them a roasting before cancelling the card.

Mozette

I think they charge interest on the statement balance if you don't pay it all off.
I could be wrong, but check the T&C.

CLAPTON

The way it works is like this:

Interest is calculated daily from the day that you spend on the card and is charged until you actually pay the money off.

As a special arrangement however, if and only if you pay the full amount each month they cancel the interest and charge you nothing.
Hence the claim of 'up to 50 (or whatever) days free credit'.

But if you don't pay the full amount, even if it’s by a small amount you then get charged as I described above.
Also if you spend more money during the next month you will be charged interest on that as you have now lost the ‘no interest ‘ feature.
This also means that even if you now pay in full, you will get a small interest charge next month which will be the interest incurred between the statement date and the day you pay.
Only when the balance is zero for two consecutive months will you go back to zero interest.
It is how most credit cards work.

popshed

Thanks for the extra info. Blimey, no wonder people have so much trouble clearing debts. Well it should be zero balanced in a couple of days. I'm going to be getting rid of the Morgan Stanley card this month too since my old debt is now practically cleared, so it's just a matter of bringing forward the point where I was going to start looking at the best cashback CC instead of the best balance transfer deals.

daveboy

popshed wrote: »

I presume there's something in the T&Cs (but honestly who reads those anyway)

You got it in one :doh:

Yet another thread where someone rants and then includes the fact it's their own fault in the post :doh:

If you want to go through the process of cancelling the card when it's your mistake...go ahead.

I wonder when the next thread similar to this one will appear....there are so many appearing it is ridiculous...but good entertainment at the same time.

Wayne_Elise

Be aware of the 0% interest cards, bacuse they are pure frauds.
You will be charged a lot and this is a marketing strategy made by the CC compaies to get more people buying with their cards.

CannyJock

Wayne_Elise wrote: »

Be aware of the 0% interest cards, bacuse they are pure frauds.
You will be charged a lot and this is a marketing strategy made by the CC compaies to get more people buying with their cards.

Not entirely. If you play them right, you'll make money from them, but there are risks involved and its not for everyone. Read up the the main stoozing site risks article if you're not sure.

If you're not confident in your ability to juggle them - use them for shuffling short term debt so that you can clear within the introductory period.

thrasher

transferring from egg card to egg money, is this possible. been trying to find answer. am a newbie

johnmoney05

thrasher wrote: »

transferring from egg card to egg money, is this possible. been trying to find answer. am a newbie

No, you can't.

Create a new thread for your own question anyway.

pauli

johnmoney05 wrote: »

No, you can't.

Create a new thread for your own question anyway.

Forum Etiquette Pls be nice to all MoneySavers. There's no such thing as a stupid question, and even if you disagree courtesy helps. :rolleyes:

johnmoney05

pauli wrote: »

Forum Etiquette Pls be nice to all MoneySavers. There's no such thing as a stupid question, and even if you disagree courtesy helps. :rolleyes:

What is wrong with my answer, please let me know? If you don't agree my answer, courtesy helps. So how about your answer? Put a "blue face :rolleyes:" here, it doesn't mean you are very friendly or nice anyway.
I find it quite offended. :T Well, a newbie doesn't give you the power to post whatever you want.