Credit Card PPI Redress Offer and Interest

[AsPraso]

Can anybody help? I have a couple of questions regards an offer I have recently received for PPI redress on a credit card. I got the offer within 2 weeks of complaining to the bank by letter so no complaints about efficiency! The PPI was taken out in 1996 (when I was a student) and payments stopped at my request in 2008. My questions relate to interest. Firstly the offer made does not seem to take into account that I have been paying compound interest at a monthly rate of 2.075% on the redress amount for almost 5 years now. I have bank statements going back to 2007 so this figure could be calculated accurately. Also regards simple interest at 8%. Is this the figure for the last five years after I stopped the PPI payments or would this be totalled for the 12 years I have paid PPI? Or is this for both together? For information, the offer is for £2,005.57 in total. It is broken down as follows: £1487.90 premiums, £20.00 charges, £332.45 total associated interest, £119.45 monthly credit interest at 8% simple and £45.77 at 8% simple interest when card was paid in full. Does this look reasonable, should I accept? All help greatly appreciated. AsPraso

[Bill-K]

Re: Credit Card PPI Redress Offer and Interest

Hi AsPraso. You are correct in that the apportioned monthly account interest which is attributable to the PPI is reclaimable, and I think this is the £332.45 "Total Associated Interest." The 8% simple interest is added for any month when the 'Notional' account balance (this is what would have been the balance if the PPI had not been purchased) is calculated to have been a credit balance - as opposed to a 'balance owing.' This appears to be the £45.77 "Monthly Credit Interest." Finally - your closing balance of zero (presumably) on settlement would also have 'notionally' been a credit balance, so 8% SI is added to that up until the date of the PPI refund calculation.

So - it looks reasonable in that they appears to have included all of the elements (along with £20 charges refunded) - but you can run a check on the calculations by using a spreadsheet we have devised for this purpose. It will only be useable for the period that your records cover - but it should give you a clearer idea. But you will need to enter the data yourself, which can be a little tedious and time-consuming. Once you have done this, we can help you estimate the PPI & interest for the period(s) where data is missing. You'll find it here:

http://www.legalbeagles.info/forums/...lator-programs

There is also an excellent explanation of the mechanics of PPI calculations by Turboman in the PPI section, although it covers fixed-amount loans, and not credit cards.

[AsPraso]

Re: Credit Card PPI Redress Offer and Interest

Hi Bill K. I will download and fill in the spreadsheet from statements that I have. One question………

Would my claim include the actual interest I have paid at credit card rates from 2008 on the portion of debt that is the result of PPI payments? My reasoning is that had I not paid the PPI or had I been refunded the PPI at the time of cancellation I would not have carried that debt for any period of time following the cancellation and would not have had to pay interest on it which unfortunately I most certainly have done.

Many thanks for your advice.

[Bill-K]

Re: Credit Card PPI Redress Offer and Interest

Would my claim include the actual interest I have paid at credit card rates from 2008 on the portion of debt that is the result of PPI payments?

...the apportioned monthly account interest which is attributable to the PPI is reclaimable, and I think this is the £332.45 "Total Associated Interest."

Sorry if my reply wasn't clear on this, but this is the account interest which I was talking about here, AsPraso. The spreadsheet takes account of this, and then adds the additional 8% SI (where applicable) to this.