Credit Card Fee & Interest

tonym_dj

Hi,

I made the mistake of not having enough funds available in my current account to pay the minimum on my credit card. I received notification of a late payment fee and the following month both the payment for that month and the previous month were taken.

I realised in subsequent statements I was paying £1 interest each month and I wasn't sure what this was for as the card was in an interest free period.

I called Barclaycard who told me the late fee was added to the back of the balance transfer and until I cleared the balance transfer I would be unable to pay the late fee and until that time I would be charged interest on the late fee.

They then told me that the minimum amount of interest they charge is £1 which means on a £12 late fee I'm paying 100% interest.

It's only £1 per month but it's still frustrating and misleading that a £12 late fee is not £12 at all as you have no way of paying just £12 unless you clear the full amount of the card.

Does this sound right? Or is there a way I can just pay the £12 or reduce the interest to the typical APR?

Many thanks

NickX

Yes this is correct - sneaky but correct :mad:

It is all down to the allocation of payments detailed in the Terms and Conditions.

Whilst you have a Balance Transfer amount outstanding, then all payments you make will go towards this amount, so other amounts (such as the late payment fee) will be trapped incurring interest.

The only solution to stop the interest is to pay the entire balance off, or transfer it to a new card (hopefully with a 0% deal).

Bear in mind also that you will probably have to clear a further amount of interest (known as residual interest) which will be the amount accrued from the last statement date to the date that you actually clear the balance.

All this is detailed in the Terms and Conditions and are the reasons that Credit Companies remain in profit.

tonym_dj

Doh!

That is annoying. I had thought about transfering the balance elsewhere but the transfer fees would be much higher than just paying £1 per month. I will just have to put up with it until the interest free period elapses and I transfer again or I clear the balance.

Thanks you reply and putting my mind at ease!