Credit card interest rip off

maltesedog

I had an outstanding balance in my credit card. Subsequently before the due date, a refund was given in the credit card exceeding the outstanding balance.

At the date the outstanding became due, I was charged interest.

When I contacted the bank, I was told that refunds are not considered as credit card payments.

This does not make sense. Any ideas or people who had similar problems?

benf90

What credit card company is it?

I suppose it all depends on what is stated in their T&Cs. The only one of my credit cards that I've had a refund on is my Egg Money card. The refund arrived between the statement date and the payment due date, like yours.

In that case it was counted as a payment as they automatically adjusted my Direct Debit amount (set to pay the full balance), no interest was charged as the full balance was still cleared.

In fact, I'd forgotten that I was going to get the refund. It wasn't until I noticed Egg had taken less by Direct Debit than I thought they were going to that I checked my account online and noticed the refund.

maltesedog

Since I'm Maltese, its a credit card of a Maltese leading bank.

But did anyone experience such problems.. is it legal?

jtwn

I have no idea if it is legal but RBS neither seem to believe refunds are payments. Its all a bit of joke really.

YorkshireBoy

jtwn wrote: »

I have no idea if it is legal but RBS neither seem to believe refunds are payments.

That's because RBS will take your DD payment based on your statement balance. Any credits to the account (from whatever source) between the statement date and the payment due date will not affect the DD. This is explained in the T&C's/DD agreement they send out.

jtwn

I do not have a DD set up and this particular card.

aliwali

Hi
I have a store card with Mothercare and it states very clearly on the back of the statement that refunds don't count towards the monthly payment, so I should still make a payment that month.
Alison

Moggles_2

maltesedog wrote: »

I had an outstanding balance on my credit card. Subsequently, before the due date, a refund was given on the card exceeding the outstanding balance. At the date the outstanding [balance] became due, I was charged interest.

When I contacted the bank, I was told that refunds are not considered as credit card payments. This does not make sense.

If the refund related to a transaction made after your statement was printed, then it would not have formed part of your outstanding balance. You would still be expected to make at least the minimum payment required by the due date.

MarkyMarkD

A refund isn't a payment. Your statement shows how much you are required to pay, and that is how much you are required to pay.

If you subsequently (i.e. after the statement date) get a refund transaction, and don't spend the money on your card, you can ask for a refund by cheque if necessary. But it doesn't alter your liability to pay the original amount by the due date.

Egg's approach is unusual. Most card operators do not deduct refunds from the payment due. Indeed, arguably they are breaching the DD rules by doing this as it means that they are not giving you appropriate notice of the correct DD amount. But as they always collect the amount they notify you, or less if a refund goes through, I don't think anyone is likely to complain.

maltesedog

MarkyMarkD wrote: »

"A refund isn't a payment. Your statement shows how much you are required to pay, and that is how much you are required to pay.

If you subsequently (i.e. after the statement date) get a refund transaction, and don't spend the money on your card, you can ask for a refund by cheque if necessary. But it doesn't alter your liability to pay the original amount by the due date."

Thank you for your clarification. I do not understand the reasining behind it. I think its a rip off. I am going to raise a complaint at the local financial services authority.

YorkshireBoy

maltesedog wrote: »

I am going to raise a complaint at the local financial services authority.

You'll have to make an official complaint to the provider first, wait 8 weeks, and get a 'deadlock letter', before the FOS (not the FSA) will entertain your complaint.