Ulster Bank credit card

danindub

Hi All,

I'm a long-time credit card user. I've been with AIB, MBNA, BoI... you name it. Now I'd like to consider myself "a smart" c/c user - I always pay my last statement in full on time to avoid paying interest.

And that was the case for years. Occasionally I was not in position to do so, and I had to pay interestest. They way I understand I was being charge interest daily at the given rate from the day last fully-payed statement was issued. And that all made sense.

I'm with Ulster Bank c/c now for about two years. Always paying balance in full, until last month. And I was expected to pay interest, but what I've got is much higher to what I expected. In fact, I calculated that I would need to have my balance about 30% over my credit limit for every day of the month to be charge amount of interested they charged me.

I called them up and woman was trying to explain me that if I don't pay it in full they back-date interest on the transactions that are still not fully paid off. So there are items on my bill apparently I'm being charged interest back to September (!). I requested a detailed breakdown of their calculations (still waiting for that...) but it sounds really weird to me. Never have I head of anything like this before...

Am I missing something? Does this makes any sense to anyone? Is this legal?

AlexisM

That sounds about right (unfortunately) but I think all banks calculate interest this way. Say your last three bills were (A) issued 10 September, payable 5 October; (B) issued 10 October, due 5 November and (C) issued 10 November, due 5 December. You paid bill A but not bill B. Transactions on bill B start on 11 September (immediately after bill A is issued) – so if you don’t pay bill B, by the time bill C is issued, some transactions are almost two months old – and that’s what you’ve been hit with interest on – interest is payable from the date of transaction, not relative to any bill date. There’s a description of how UB charges interest on the back of each page of your c/card statement.

As an example, if you bought something for €100 on 11 September but didn’t pay it back, by the time bill C is issued, you will owe almost 2 months interest (@ c. 1.313% per month) – about 2.6%. If you feel you’ve been charged much more than this, post some rough numbers and dates so we can see where the problem might be.

danindub

That's very interesting. I still find it odd though.

How can interest be "backdated"? I would assume that regardless of anything, the interest charged on each bill should be no more than one month of time, regardless of when the original transaction have taken place and rather on the actual balance of the credit card each day in the billing month. As in the absolute maximum possible interest charge any month should be credit card limit * monthly interest rate (assuming credit card is maxed out all the way through the month).

Again I have never heard anything like this but then again it's likely that similar situation never occurred in the past.

The explanation just sounded really dodgy to me.

Pablo1802

danindub wrote: »

The explanation just sounded really dodgy to me.

AlexisM is absolutely right. You have to pay your bill in full to avoid paying interest. Otherwise you might pay much more than you may expect.
Exactly the same policy applies to all AiB credit cards from Oct 2010.

AlexisM

danindub wrote: »

How can interest be "backdated"?

I think the principle is that all transactions are charged interest from the date of purchase but this interest is forgiven if you pay your bill on time - so it's not that it's backdated, more that the interest-free period is not given.