Charged interest on paid balance?

ExeCuteUK · 10 January 2019 at 1:44PM

Hi,

Im with Virgin Atlantic credit cards. Account begin December 6th.

I paid 1950 off 2 weeks before first statment date at beginning of january which left me £30 short of paying in full.

Ive been charged £27 interest on this first month and I dont understand why ?

Any help would be appreciated as I assumed no interest is payable on cleared balance.

Ive been on the phone for an hour to Virgin and they wont tell me how this has been calculated.

Thanks

Dobbibill · 10 January 2019 at 1:46PM

Because you haven't paid in full.

You only get an interest free grace period if your balance is paid in full.

ExeCuteUK · 10 January 2019 at 1:49PM

Thanks for the quick reply!

The £30 was a mistake as it wasn't expected on the bill, but I was always under the assumption interest is only paid on the outstanding balance ? I guess I have been wrong !!

Dobbibill · 10 January 2019 at 3:24PM

Interest is calculated daily on the balance and billed monthly.

It may be a good idea to set up a DD to pay in full each month so it doesn't happen in the future. It's a shame to incur so much interest on a relatively small balance left.

Brutal way to learn but hopefully it will just be a one off for you.

If you do go down the DD route make sure you check the date the first one will kick in - it's not always set up in time for the next statement so that may need to be a manual payment.

Terry_Towelling · 10 January 2019 at 3:44PM

Just on the subject of clearing the balance in full to avoid interest, there are some exceptions.

Barclaycard for example makes a distinction between what it calls your 'main balance' and any 'promotional balances' (such as balance transfers and instalment plans). So, if you have a 0% BT outstanding on your account but also use the card for spending, then as long as you clear your new spending (your 'main balance') each month you will not be charged interest on that spending despite the fact that you are carrying a balance (in the form of a BT) to the next statement.

Only words of caution here (for BT customers) are don't pay any new spending until it has appeared on a statement and check that your CC provider treats promotional balances the same way as Barclaycard does.

I must admit, I thought they all had to do this following the hoo haa of a few years back when all CC providers diverted payments to the 0% BT element first in order to guarantee you incurred interest on your new spending. Sadly, from my limited checking of CC T&Cs, it seems they can still charge you interest on your new spending (even if you clear it) as long as they channel your payments to the 'higher interest' parts of the balance first.

Ben8282 · 13 January 2019 at 3:23AM

What you are claiming makes NO SENSE if it was a purchase transaction.
You say the account began 6th December and that you repaid £1950 two weeks before the first statement date at the beginning of January (ie the £1950 had not yet appeared on a statement when you paid it) leaving a balance of £30, which was presumably the balance of the first statement.
Why did you choose to repay this amount before it had appeared on a statement?
You should not have been charged interest on purchases on the FIRST statement as you have ot previously had a statement to pay.
Was the £1950 that you repaid in respect of a cash advance or cash transaction?

Craig1981 · 13 January 2019 at 8:14AM

agreed with Ben - seems like you have either withdrawn cash, used as a cash transaction (gambling sites etc) or paid off a finance agreement (yes, some card do class this as a cash transaction)

could it be that the payment is yet to show on your account, and what you are reading is "estimated" interest for next month if not paid off in full?

dealer_wins · 13 January 2019 at 11:13AM

Ignore Rockeye hes a post building spammer lol

SuperHan · 13 January 2019 at 2:13PM

Ben8282 wrote: »

What you are claiming makes NO SENSE if it was a purchase transaction.
You say the account began 6th December and that you repaid £1950 two weeks before the first statement date at the beginning of January (ie the £1950 had not yet appeared on a statement when you paid it) leaving a balance of £30, which was presumably the balance of the first statement.
Why did you choose to repay this amount before it had appeared on a statement?
You should not have been charged interest on purchases on the FIRST statement as you have ot previously had a statement to pay.
Was the £1950 that you repaid in respect of a cash advance or cash transaction?

If you don't pay your statement in full aren't you charged interest from the date of purchase until the payment date? So the £1950 would have accrued interest between the purchase date and payment date unless the next statement was paid in full.

Charged interest on paid balance?

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