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I am new to the forum and wanted to share a potentially intriguing issue for further consideration.
Those who have a credit card with Barclaycard may have received recent correspondence confirming that an error in the historic calculation of minimum payments has led to them overcharging interest. In my case, an overcharge of around £100 in interest will be refunded in December 2016.
Barclaycard didn't give much away, but I believe this may involve an incorrect application of the 1% plus interest calculation which, if I'm right, came into force from November 2010. A smaller minimum payment would have led to future interest payments being marginally higher (as applied to a larger balance). With time and compounding the impact could be material.
Clearly, Barclaycard have decided to take a more proactive approach to contact those affected, but what about other companies?
I just checked an old statement (April 2013) for my Halifax credit card and notice they calculated a minimum payment of £38, based on a statement balance of £1782.73. Interest due on that balance in the coming month was 30x0.064%x1,782.73 = £34.23. This implies the minimum payment was sufficient to reduce the balance by only 0.2%.
I have noted that payments are now being calculated as 1% of the balance plus interest so clearly a change in method sonce April 2013.
Does anyone know if the 1% of balance plus interest calculation applied to new accounts from November 2010 or all accounts? If only new accounts, was there a later requirement to move to this approach (Halifax appear to have moved to this approach since April 2013). My main issue is whether I (and anyone else in a similar situation) was overcharged interest as a result in a similar way as for Barclaycard.
Any help from someone in the know would be appreciated.
Many thanks
Those who have a credit card with Barclaycard may have received recent correspondence confirming that an error in the historic calculation of minimum payments has led to them overcharging interest. In my case, an overcharge of around £100 in interest will be refunded in December 2016.
Barclaycard didn't give much away, but I believe this may involve an incorrect application of the 1% plus interest calculation which, if I'm right, came into force from November 2010. A smaller minimum payment would have led to future interest payments being marginally higher (as applied to a larger balance). With time and compounding the impact could be material.
Clearly, Barclaycard have decided to take a more proactive approach to contact those affected, but what about other companies?
I just checked an old statement (April 2013) for my Halifax credit card and notice they calculated a minimum payment of £38, based on a statement balance of £1782.73. Interest due on that balance in the coming month was 30x0.064%x1,782.73 = £34.23. This implies the minimum payment was sufficient to reduce the balance by only 0.2%.
I have noted that payments are now being calculated as 1% of the balance plus interest so clearly a change in method sonce April 2013.
Does anyone know if the 1% of balance plus interest calculation applied to new accounts from November 2010 or all accounts? If only new accounts, was there a later requirement to move to this approach (Halifax appear to have moved to this approach since April 2013). My main issue is whether I (and anyone else in a similar situation) was overcharged interest as a result in a similar way as for Barclaycard.
Any help from someone in the know would be appreciated.
Many thanks
