Clearing your balance

This page explains the interest charges which could apply when clearing your balance.

Residual interest. What’s that all about?

There’s a handy example below to illustrate what interest charges might apply when clearing your balance, but we’ve also created a video to give you a simple overview on what’s known in the industry as ‘residual interest’.
 

Residual interest video
  • Residual interest.

    What's that all about?

    Well, interest might be charged when you borrow money but you might not know how it's charged.

    Interest will start to accumulate daily on the total amount you owe in accordance with your terms and conditions.

    Every month you'll pay some of it off.

    But what happens is when you pay off the full statement balance? Well, assuming you don't make any new transactions, you'll get another statement which will include a final interest charge.

    That's what's known as residual interest.

    This covers the period between your last statement being issued and the date your full balance payment reaches us.

    But once that second statement is paid off you're all paid up.

    So there you go.

    Residual interest.

    There's more about how interest is charged in your account terms and conditions.


Here’s an example1

Woman using a tablet

This is Kate. She hasn’t used her credit card in over a month so, when her latest statement arrives, she decides to pay off her outstanding balance.

person using a smart phone

The amount shown on Kate’s statement is £2198.09. This includes all interest charged up until the date the statement was produced, but not the interest that accumulates after that date. Interest is charged daily.

Kate makes a payment of £2198.09 using her debit card.

woman on a bicycle

Kate’s next statement arrives. She hasn’t used her credit card in over two months now.

Kate’s outstanding balance is £18.02, which is the interest charged between her previous statement being produced and the date her last payment reached her account (residual interest).

As the £18.02 is purely interest, we won’t charge further interest on that amount.

woman reading

Kate makes a payment of £18.02 which then clears her balance in full.

She’ll receive a final statement showing her balance as paid in full.

No further statements will be issued when there's no account activity or balance left to pay.
 

1 This example is provided for illustrative purposes only. It may not be representative of real account information.