Barclaycard interest calculation

[verdant]

I've just been looking at my Barclaycard statement from a few weeks ago. Something strange happened. I pay the minimum payment by direct debit and Barclays took the amount they stated on my previous statement. I made no other transactions during the month and was not over my limit at any point during the month but somehow the interest charged took me over my credit limit.

 

When I worked it out I believe that Barclaycard had incorrectly calculated my interest. The monthly interest rate stated was 2.207% and the balance from the previous statement (constant for the month) was £259.57. A very quick calculation leads me to believe that the interest should have been £5.72 however Barclaycard charged me £7.52 in interest. Thats an overcharge of 31%.

 

On further calculation I worked out that the payment they had taken was not for the correct amount. Based upon the previous month's statement with a closing balance of £259.57, 3% of this is £7.78. Barclaycard took only £7.00.

 

The reason I noticed this and went to the trouble of making the calculations was that even though the minimum payment is made automatically by direct debit and I made no other purchases from the account they claim the credit limit was breached and applied a £12 charge.

 

I called Barclaycard and they couldn't explain how they had worked out the interest but insisted there was no mistake and the charge and interest stood. They also stated that the £7.00 minimum payment was correct as it was 2.5% of the outstanding balance (clearly incorrect). After much insisting on my part, they agreed to send out a detailed breakdown of how the interest amount was calculated.

 

I went and checked three other statements at random and I believe the interest was similarly miscalculated by Barclaycard on each of them. By my reckoning, the miscalculation takes the APR from 20 odd percent to 41%. When you factor in that on two of the three months the over charged interest took the balance over the limit and caused a £12 charge to be applied, if you count that charge along with the interest, I calculated that the equivalent APR would be a staggering 71%.

 

Just to check my method I checked my wife's statements on a seperate Barclaycard account and got very similar amounts to those calculated by Barclaycard (near enough for rounding errors to have explained the difference). So it looks to me like I was performing the calculation correctly.

 

Has anyone else noticed anything similar? Have I performed the calculations correctly? Are Barclays routinely miscalculating interest on some accounts? Or perhaps the rest of you have lives and don't spend your time working out what the interest on your credit cards should be.

[dangerousjohn]

I've noticed the same on my barlcaycard statement.

 

Last month was the first month I'd not paid my barclaycard in full, and the first month I'd been charged interest.

 

I'd paid £450 of the £678 bill expecting to pay interest on the outstanding £228. My interest rate is 1.385% monthly (17.9% apr) so expect to pay £3.17 interest.

 

Much to my surprise Barclaycard charged £15.63, which works out at 6.82% monthly or 120% apr !!! If I've got my sums wrong please tell me.

 

Working backwards from the interst charged (£15.63 @ 1.385%) would suggest that I had an outstanding balance of £1,128. For a long time I couldnt make any sence of this figure at all, paranoid that I might be missing something; but interstingly enough if you take my initial balance of £678 and add (not subtract) my payment of £450 you get.... £1,128!!!!

 

So it wold seem that when barlcays calculated my interest, they added my payments to the initial balance instead of taking it off - my 11 year old is better at maths than a worldwide bank !!

 

I would urge all barclaycard customers to check any interest charges.

 

If fact I would urge all barclays customers to leave en-mass, with all the banking errors they've made on my account in the last year, like losing cash deposits made over the counter - I've received no compensation but they are quick enough to apply there own charges. Plus my local barclays branch manager is the most obnoxios banker I've ever met.

[MarkyMarkD]

I'm surprised nobody's answered this for you.

 

Interest is charged from the date of purchase to the date of payment.

 

So if you make a purchase of £678 on 1 August, and get a statement on 21 August, and pay part of the balance (say £450) on the statement due date of say 14 September, then on your 21 September statement you will see interest calculated as follows:

 

- £678 from 01/8 to 14/9 = 45 days at 1.385% pm = £13.89

- £228 from 14/9 to 21/9 = 7 days at 1.385% pm = £0.73

 

Total interest in this example = £14.62. Similarish to your example.

 

Your calculation is wrong because you are ignoring the interest on the part you paid off. You only get interest free credit from the purchase date to the payment date if you pay the whole balance off by the due date.

[slick132]

Hi MarkyMark and welcome to CAG.

 

Thanks for replying to this.

 

We do our best to see that posts get replies although, on a site as big as this, some may slip through unanswered. Also, it may be that no one who looked knew the answer and it needed an expert's response !

 

Hope you'll be around to help others.

[MarkyMarkD]

Thanks, slick. Glad to help.