Are Barclaycard trying to charge me undue interest?

somnerd13

A few months ago I managed to get a Barclaycard (Initial). I did spend a bit on it in the first month, and cleared the balance in full by the due date. Next month I then spent quite a lot on it (£450). I then found out that they were doing a promotional balance transfer rate of 6.9%. I thought this sounded good as I had other debts on other cards. I knew about the order in which credit card companies allocate payments so I was clear on the fact that I had to pay off my purchases in full before I transfered the balances. I did this, I paid the purchases off only days after making them, and long before the due date. Not long after this I then transfered the balances (£850).

However, yesterday I received my monthly statement, which says that the estimated interest for next month is £19 based on a purchase rate of 24.9%!!

Now I know that payments are allocated to the lowest interest rate parts of the balance first - but I paid the purchases off before I transfered the balances on!! When I transfered the balances on, the balance of the card £0.00.

I have just rang Barclaycard to clear this up, and got through to a call center where shall we say, isn't based in the UK. I don't think the guy could understand the point I was trying to make but kept saying that it is just an estimate and I will only pay 6.9% on my balance transfer. I mentioned that the statement estimated £19 interest on 24.9% even though I'd cleared my purchases, but he just said "Don't worry, you won't be charged that".

Is the guy in the call center right, or have they allocated my £450 payment to the balance transfer rather than the purchases, even though the payment was made BEFORE the balance transfer?

bethanyrayne

somnerd13 wrote: »

A few months ago I managed to get a Barclaycard (Initial). I did spend a bit on it in the first month, and cleared the balance in full by the due date. Next month I then spent quite a lot on it (£450). I then found out that they were doing a promotional balance transfer rate of 6.9%. I thought this sounded good as I had other debts on other cards. I knew about the order in which credit card companies allocate payments so I was clear on the fact that I had to pay off my purchases in full before I transfered the balances. I did this, I paid the purchases off only days after making them, and long before the due date. Not long after this I then transfered the balances (£850).

However, yesterday I received my monthly statement, which says that the estimated interest for next month is £19 based on a purchase rate of 24.9%!!

Now I know that payments are allocated to the lowest interest rate parts of the balance first - but I paid the purchases off before I transfered the balances on!! When I transfered the balances on, the balance of the card £0.00.

I have just rang Barclaycard to clear this up, and got through to a call center where shall we say, isn't based in the UK. I don't think the guy could understand the point I was trying to make but kept saying that it is just an estimate and I will only pay 6.9% on my balance transfer. I mentioned that the statement estimated £19 interest on 24.9% even though I'd cleared my purchases, but he just said "Don't worry, you won't be charged that".

Is the guy in the call center right, or have they allocated my £450 payment to the balance transfer rather than the purchases, even though the payment was made BEFORE the balance transfer?

Hope you get it sorted but you should have waited for a statement with £0.00 balance before doing the transfer.

adaze

You will have to pay interest on the interest, if that makes sense. Basically - you had a balance which you paid off in full, but this was a balance that was accruing interest. When you cleared the balance there was interest to be added (you would have seen this on your next statement had you not done a BT). So now you have done a BT, that should be at the 6.9% rate BUT the (hopefully) small amount of interest from the previous balance will now earn interest at the purchase rate.

That said the "estimate" is usually pretty acurate and, at least I thought, included promotional rates (at least I remember seeing something like - next month your estimated interest is £0.00 at 0.000%). You should always wait for the clear statement, BUT it isn't always possible, you can still save money even though you still have a small amount gaining interest at the full rate.

somnerd13

But why should I pay any interest on the purchases? I paid them off in full before the end of the month.

The timeline is similar to this:

The card was issued sometime at the end of March.

15th April - Receive statement dated 15th April - balance £34.95, minimum £5 due by 16th May.
16th April - Make large purchases totalling £496.78.
23rd April - Pay £100 onto card.
25th April - Pay £350 onto card.
28th April - Pay £46.78 onto card - making balance £0.00.
30th April - Request two balance transfers at 6.9% (processed about a week later)
16th May - Receive statement dated 16th May - balance £828.24, minimum £20 due by 10th June.

Sounds ok. However, on the statement it also says:

Interest rates
Purchase Annual Rate 27.90% Cash Annual Rate 27.90% Next month's estimated interest

I can't see why I'd be paying interest on my purchases, as they were paid off long before the due date? The only thing I can see is that they have allocated the payments I made to my balance transfer, even though the payments were before!!

littleoldme_2

by my maths you never paid it all off before the balance transfer. you still had 34.95 left. so they would of charged interest on the full 531.73 and this will be where its coming from.

somnerd13

littleoldme wrote: »

by my maths you never paid it all off before the balance transfer. you still had 34.95 left. so they would of charged interest on the full 531.73 and this will be where its coming from.

Sorry I can see how it looks like that. It's my fault for trying to simplify it and missing bits out.

It should read more like this:

The card was issued sometime at the end of March.

4th April - 2 transactions, one for £30.00 and one for £0.96.
12th April - 1 transaction for 3.99.
15th April - Receive statement dated 15th April - balance £34.95, minimum £5 due by 16th May.
16th April - 3 transactions, one for £229.99, one for £182.97, one for £9.99.
18th April - 1 transaction for £6.38
19th April - Cash withdrawal of £30.00
23rd April - Pay £100 onto card.
25th April - Pay £350 onto card.
28th April - Pay £46.78 onto card - making balance £0.00.
30th April - Request two balance transfers at 6.9% - £375.45 and £451.21 (processed about a week later)
16th May - Receive statement dated 16th May - balance £828.24, minimum £20 due by 10th June.

This is exactly how my statement looks. The transactions total £494.28 but my payments total £496.78 so I actually paid in full + extra!

As well as all this, at the bottom is also says

Interest, fees and charges 16 May Interest On Your Cash Balance
INTEREST 2.075%0.4616 May Interest On Your Balance Transfer
BALANCE 365.95 INTEREST 0.561%1.1219 April Cash Adv/Chq Handling Fee
FOR £30.00 ON 19 APR2.50
Total of interest, fees and charges£4.08

Now when I add these to my balance transfer totals, bar the Cash Adv fee (already paid previously) it amounts to the same, bar a few odd pence to my new balance.

So I'm now even more confused.

somnerd13

Help, anybody?

somnerd13

My interest gets charged to tomorrow so I'll have an update.

I rang them again only to be told the same thing - it's an estimate and I shouldn't be charged it. Why do I not trust them? :rolleyes:

somnerd13

Update..

Rang Barclaycard today on a number I found that was for a UK call centre, and it was, thank god.

It turns out that some of you were right in saying that even though I paid my cash/purchases balance off before applying for a balance transfer, the payments have actually gone towards my balance transfer! Anyway, the advisor put me on hold for a few minutes and when he came back he told me that he had spoken to another department and said that I was a new customer and not aware of this 'rule' and they had agreed to put my whole balance back to 6.9%! Well thank god for that.

To be quite honest I can not find this so called 'rule' anywhere, however I didn't fancy questioning him on it seeing as it is sorted now.