minimum charge less than actual charge

timgun

hi all

is it legal for cc companies to charge more than the minimum charge ?ie: my balance is rising every mth without me doing anything apart from paying the min charge.

thanks
tim

Bokkens

Welcome to MSE,
as someone else said yesterday "what you think credit companies work illegally"?
Phone up customer services and ask them to explain the allocation of interest to your account .

jonesMUFCforever

timgun wrote: »

hi all

is it legal for cc companies to charge more than the minimum charge ?ie: my balance is rising every mth without me doing anything apart from paying the min charge.

thanks
tim

Why; when you can see that your debt is increasing are you not doing something about it, by increasing the amount you pay each month?

adaze

its increasing each month because the interest is more than you are paying off. its not illegal, you signed up to the credit agreement which tells you how interest will be charged. the minimum is usually a fixed amount, say 2.5% of the balance, whereas interest is dependent on what the balance is, the higher the balance, the more interest. you need to work out what payment will start to bring down your balance, otherwise it is only going to get bigger.

ShelfStacker_3

timgun wrote: »

hi all

is it legal for cc companies to charge more than the minimum charge ?ie: my balance is rising every mth without me doing anything apart from paying the min charge.

thanks
tim

Perfectly legal. Most also now have a note in the small print stating that only making the minimum payment will make your debt larger and take longer to clear up.

Just to make it crystal clear: DON'T ONLY EVER PAY THE MINIMUM REPAYMENT unless there is absolutely NO alternative whatsoever. What's your credit limit on the card? And what's your balance? Usually you'll want to be paying back at least three or four times the minimum repayment, or as much as you possibly can without getting yourself into worse trouble.

jamalfatty

Its not illegal (perhaps most overused word on board ever?!) - however your card company should adjust how they calculate your minimum payment if this happens over an extended period (typically 3-6 months).

Its called negative amortisation which is basically where payment requested in a certain period does not cover the interest for that same period, phone your credit card company and ask to speak to someone about it, they should be able to rectify it (although it will probably need escalating - and will mean that your minimum payments will go higher)

YorkshireBoy

jamalfatty wrote: »

...your card company should adjust how they calculate your minimum payment if this happens over an extended period (typically 3-6 months).

Halifax do this on their cards. From the Halifax credit card T&C's...

Each month, you must repay at least 2% of the amount you owe us, or £5, whichever is more. However, if you have a balance owing on your card which is charged interest at a rate of 26.75% per annum or more, then your minimum monthly payment will be 2.25% of the amount you owe us, or £5, whichever is more, until that balance has been paid off.

timgun

@yorkshireboy: Halifax state that the amount you pay will reduce the debt eg 26.25/12 = 2.187 and your min repayment is 2.25 % of balance thus the amount you owe goes down, even if only by a fraction.
@adaze: "...whereas interest is dependent on what the balance is, the higher the balance, the more interest.." erm, I'm not sure what sort of cc you have but mine has fixed rate of interest set at 24% or something, doesn't matter what the balance is the rate is consistent.
My point was that the minimum payment should be marginally more than the interest as in the example above with the halifax (the minimum payment is 0.06% more than the interest for the same period - ridiculously small amount but a move in the correct direction none the less).
@jonesMUFCforever: don't bother responding to people posts if you have nothing useful to add, your comment is unhelpful, patronising and quite frankly a bit idiotic, I wasn't asking about reducing my debt and its a bit bloody obvious that if I want to get rid of it then I pay more. As you are so interested in my financial status, I'm actually debt free (having just paid that card off), it was a simple question about the legality of pushing someone into debt without them doing anything, at the very least it seemed absurd that making the min payment didn't reduce your debt as surely that's the point of it, unless of course they want to push the user up and over their limit and then start putting charges on, further pushing that person into debt.
@jamalfatty + others: thanks for replying, I thinks it's terrible that they can do that, shocking really, but hey ho...I wont be getting my self into that mess again.

tim

spaceman5

[quote=timgun;8848869@jonesMUFCforever:_don't_bother_responding_to_people_posts_if_you_have_nothing_useful_to_add,_your_comment_is_unhelpful,_patronising_and_quite_frankly_a_bit_idiotic,_tim[/quote]

my god what is with people on these boards recently, people come on here asking for advise, when they get the advise they dont want to hear, they shoot the person down in flames, i cannot see anything wrong with his advice, just telling you to pay more than monthly minimum, which nearly everybody else who offered you advice said the same.

timgun

sorry that was a bit ott of me, but i wasnt asking for advise on debt reduction, just about the charges.

again, apologies.
tim

jonesMUFCforever

Don't worry peeps - 'sticks and stones' and all that.

However it provoked a reaction which is good and it is great that OP is now debt free.
Just shows that we consumers have to be on the ball at all times.
These companies spend many thousands of pounds on legal advice before coming out with any product - so OP can rest assured that if it is legal.

As I understand it the new Banking Code was supposed to stop this but I think it has been dropped from the new version coming out next month.