Purchase interest on a Credit Card

kilograms

I have a Bank of Ireland credit card and for the past few months i have not been using it, i just pay off it each week but when i get the bill, i get charged a purchase interest charge, 28euro this month. why is this happening when i dont purchase anything

Ideo

I assume its the interest on the outstanding balance? How much do you owe and what interest rate do you pay?

kilograms

2,368.49 balance
purchase interest - 26.45
cash interest 7.63

its a mastercard, i checking my online banking now and cant see the interest rate, i know its on the bill i get posted but i do not have one at the moment

Nonoperational

It's the interest on previous purchases (as opposed to cash advances which is the cash interest). You keep paying interest on them until you clear your balance!

kilograms

thats strange, i get a cash interest on every bill and the last time i took cash from my credit card was 3 years ago and for the past few months i have not used my card at all, my bills just have the payments i put off the bill on it

Ideo

kilograms wrote: »

thats strange, i get a cash interest on every bill and the last time i took cash from my credit card was 3 years ago and for the past few months i have not used my card at all, my bills just have the payments i put off the bill on it

I think they offset the payments against purchases and cash trans proportionately, so you could still owe an amount on the withdrawals? Are you only meeting the minimum repayments each month op?

kilograms

no minimum payment is 60 and i pay 100 each month

coylemj

Ideo wrote: »

I think they offset the payments against purchases and cash trans proportionately, so you could still owe an amount on the withdrawals? Are you only meeting the minimum repayments each month op?

I don't think that's true, they normally apply payment to one thing at a time i.e. there is a preferential hierarchy which is applied to the benefit of the customer by which the outstanding balance with the most aggressive rate of interest (typically cash advances) gets money applied to it first.

The OP needs to clear off the interest and principle on cash advances ASAP.

This is the order in which BOI applies payment to CC accounts.....

Payments to your Account

11. (a) We will only consider a payment made when it is received by us and credited to your Account. We will apply payments towards what you owe us in the following order:

(i) Any monthly payment due to us under a Payment Plan (oldest first)
(ii) Interest on any fees and transactions, which you have not paid when due to us, excluding interest on cash advances
(iii) Account fees and charges other than annual fees and cash advance fees
(iv) Insurance premiums
(v) Annual fees
(vi) Interest on cash advances
(vii) Cash advance fees
(viii) Balance transfers
(ix) Purchases shown on previous statements or the latest statement
(x) Cash advances shown on previous statements or the latest statement
(xi) Transactions and amounts you owe us that have not yet appeared on your statement in the same order as above
(xii) Amounts owing but not yet due under Payment Plans (oldest first)

Ideo

coylemj wrote: »

I don't think that's true, they normally apply payment to one thing at a time i.e. there is a preferential hierarchy which is applied to the benefit of the customer by which the outstanding balance with the most aggressive rate of interest (typically cash advances) gets money applied to it first.

The OP needs to clear off the interest and principle on cash advances ASAP.

This is the order in which BOI applies payment to CC accounts.....

Payments to your Account

11. (a) We will only consider a payment made when it is received by us and credited to your Account. We will apply payments towards what you owe us in the following order:

(i) Any monthly payment due to us under a Payment Plan (oldest first)
(ii) Interest on any fees and transactions, which you have not paid when due to us, excluding interest on cash advances
(iii) Account fees and charges other than annual fees and cash advance fees
(iv) Insurance premiums
(v) Annual fees
(vi) Interest on cash advances
(vii) Cash advance fees
(viii) Balance transfers
(ix) Purchases shown on previous statements or the latest statement
(x) Cash advances shown on previous statements or the latest statement
(xi) Transactions and amounts you owe us that have not yet appeared on your statement in the same order as above
(xii) Amounts owing but not yet due under Payment Plans (oldest first)

If it takes purchases over cash advances according to that, then how come the OP is seeing both interest charges on his statement?

OP - think you should contact the bank to clarify

coylemj

Ideo wrote: »

If it takes purchases over cash advances according to that, then how come the OP is seeing both interest charges on his statement?

OP - think you should contact the bank to clarify

Clearly the money he is paying is not sufficient to clear the balance outstanding on purchases so the interest keeps accumulating.

Ogham

It will take about 3 years to clear that balance at €100 a month. You will end up paying around €1000 in interest from today onwards. You should try and clearit quicker if you can . (Or if you are on low income - maybe wait for the new Insolvency Rules and try and get it written off?)
see http://insolvencyarrangement.com/get-your-debts-written-off-in-ireland/