[MikeyB]

Could someone help me please ? I am very financially and mathematically literate, but I'm struggling to understand my latest interest charge, as I usually pay off my balance each month, so any help would be appreciated. My May bill was £2,943.47 and the narrative underneath told me that, if I make the minimum payment of £58.00 and it reaches Tesco by the due date of 3rd June, the "estimated interest payment next month is £55.88". In pulling funds from various bank accounts to settle the bill, I someonehow managed to miscalculate the total paid, so I "only" paid £2,543.47 in total (£400 short of the full bill). However, on receiving my June statement, I can see that I've been charged £59.48 interest, which is more than the previous bill told me I'd be paying had I only made the minimum payment ! I haven't made any cash withdrawals or balance transfers and my April bill was cleared in full, so I started with a nil balance in May. I'm thus very confused as to how I've paid more in interest by crediting over £2.5k to my account than I would have done had I only paid the minimum amount of £59......I've looked at the reverse of my bill and it's not very explanatory as to why this has happened, or is the statement re interest on minimum payments misleading ? Confused is an understatement and I'm seriously now considering cancelling the card (and we use it for pretty much all our spending each year, so accordng to our annual statement have spent over £26k on it last year, and I suspect a similar figure in many previous years...) and finding one which has clearer T's & C's so we dont fall into the trap again... Thanks in advance anyone who wants to try and explain the interest calculation method....Mike

[Tesco-Bank]

Hi , I'm sorry to hear about this. The estimated interest charge is only an estimate, and this can increase or decrease depending on your spending within that month. Once you clear your full balance, you will see a further interest charge on your next statement. This is called residual interest and is made up of the interest that had accrued between your statement producing and your full payment clearing into your account.



The way we calculate interest is your average daily balance X your daily interest rate X the number of days in your statement cycle. To work out your average daily balance you would divide your sum of balances each day by the number of days in your statement cycle. Any interest applied is system generated, this isn't something we or the telephony advisers would work out. I hope this helps - Ainsley

[MikeyB]

first of all Ainsley, thank you for a speedy response. Sadly though, it doesn't deal with my fundamental question of why my interest charge is almost 10% more than the "estimate" on my statement when I've paid 85% of the outstanding balance by the due date ? I could understand if there was an interest amount charged on the outstanding balance of £400 at the due date, but to charge me almost £60 on this, much lower, remaining outstanding balance at the due date is, at best, sharp practice and, at worst, akin to the "Wonga's" of this world. I appreciate this isn't your personal policy, but I'd be grateful to have some form of detailed explanation (by email if necessary) as to how my numbers were calculated ? If this isn't something that's possible, then I will, regrettably need to consider closing my account having had it for many, many years..

[Tesco-Bank]

Please message me directly and I'll check your account for you. If I can't assist you any further here, I can certainly pass you on to another department - Ainsley

[MikeyB]

Will do Ainsley, I don't often use these forums, so is the protocol for the email your [email protected] ? or are you asking me to message you via the forum ? Sorry if I'm being a little slow... :0)

[Tesco-Bank]

That's okay, Mikey! If you could message me via the forum that would be great! - Ainsley

[MikeyB]

ok Ainsley, just found out how to do that (clicked on your Avatar and then "send message", so hopefully you'll get my info in a PM shortly. Many thanks and kind regardsMike(y)

[heanor_man_34]

Hi Mikey, I completely understand your frustration but Tesco Bank aren't the only ones who apply similar practices; a look on the forums over on Money Saving Expert shows familiar stories. I do hope you're able to resolve your question(s) with the Customer Services team and decide to keep the account open.