@barclaycard Inconsistent Interest Rates

[Domster62]

Does anyone on this Forum have any experience or insight into the following?

 

I was checking my Barclaycard statement and thought the interest charged was higher than I would expect. Being a sad soul I keep a record of outstanding balances and interest paid each month. I phoned Barclaycard and asked them to explain. During the phone call the person on the phone provided 3 different figures that were used to calculate interest, none of which delivered a figure equal to the amount of interest on my statement using the monthly rate quoted on my statement. They explained about opening and closing balances and the average daily balance. However the figures they quoted were all higher than even the highest figure on my statement, I asked how come with an opening and closing balance they arrived at an average daily balance figure that was higher than either of the opening or closing balance and they could not provide an answer. They sent me a nice letter re-iterating what I had been told on the phone.

 

I have been back through my statements for the past 2 years and on only one occasion has the interest figure charged been close to the rate quoted on my statement, I appreciate that my methodology has not been absolutely scientific - calculating interest on an average of the opening and closing balance figures but I figured it would be pretty close. The results were interesting and sometimes suggested I had been undercharged, however unsurprisingly the nett result worked out in their favour by 7.19%.

 

I think I am reasonably intelligent and I have read and re-read the information provided but whichever way I look at it I cannot reconcile the interest charged by Barclaycard with my own calculations. I am not at all happy about this and regard it as yet another example of how Banks rip off consumers. I think it is appaling that they cannot make adequate or sufficient profits legitimately or efficiently and so elect to boost their profits through unfair charges, mis-selling of PPI and deliberately opaque calculations on interest.

 

I would be interested to learn from anyone on this forum who has had a similar experience.

[slick132]

Hi Domster,

 

Are you using a compound interest calculator or spreadsheet to check the figures. Check our Interest Tutorial for some guidance - http://www.consumerwiki.co.uk/index.php/Interest_Tutorial

 

Try using this spreadsheet for the Tutorial - http://www.shweb.pwp.blueyonder.co.uk/interestcalcs.xls

 

To get the interest rate right, you need to convert the monthly figure from your statement to an annual figure. You need a converter to do this as you cannot simply multiply the monthly rate by 12 - that would give you the wrong answer.

 

If your statement gives you an APR, you can use this on the spready and see what figures you get.

 

[Domster62]

Slick,

 

Thanks for the pointers on interest calculations and the spreadsheet, most useful.

 

I used the monthly APR rate provided on my statement, 1.597% per month- my beef is with the fact that I was quoted a figure which was used to calculate the interest and it was a figure higher than the highest balance on my statement over the statement period. I queried the calculation and was given 3 different conflicting figures none of which resulted in the same interest charge figure as I calculated using the monthly APR rate. As I understand it the information provided by the card providers should be transparent and easily understood, at present this would not appear to be the case.

 

I have checked my statements and in a lot of cases there have been no transactions over the statement period so using opening and closing balance and averaging the figures which takes into account payments made and interest applied should be close to the figure they use as the basis for calculating interest. However my calculations consistently deliver a different interest figure to that shown on the statement.

 

As your WIKI indicates the impact of interest being calculated on figures which include previously charged interest can see the balance due "mushroom" in pretty short time.

 

Thanks for all your advice so far, will be making a contribution to the Forum when I receive my compensation as you are doing a valuable job on behalf of the consumer.