Is my credit card company allowed to charge me a late fee even though I paid on time?

Q I have a MBNA Visa card and pay the minimum amount by direct debit every month. In my June statement, I was told that I had missed a payment and that a £25 late fee was going to be charged. I queried this and was advised to make a payment first and then get back in touch once this had been received. The same statement also estimated my next month's interest to be £15.65.

However, my July statement showed I had been charged over £144 in interest. I queried this and was told that, as I had incurred a late fee, the terms and conditions allowed MBNA to withdraw the card's promotional rate of 1.9%. A strict reading of the terms and conditions supports this view, but surely the higher rate of interest should have been indicated? Plus, a statement to the effect that the lower rate had been withdrawn surely should have been included in my June statement?

Moreover, having changed banks recently, I checked that the direct debit instruction to MBNA had been successfully transferred. My new bank, Smile, confirmed that it had, and that a payment had been taken out in April. I have since paid off the card balance.

Do I have a claim against MBNA?

PO

A I agree there should have been some indication on your statement that you would be liable for higher interest as a result of the late payment charge, and MBNA deserves a sound ticking-off for not providing one. This is just the sort of poor transparency the Office of Fair Trading has been trying to stamp out among credit card issuers.

But more to the point, seeing as you have never missed a payment, MBNA was even more wrong to charge you a late fee and then add insult to injury by charging you a higher interest rate as a consequence.

You don't indicate whether it continued to charge you interest at a higher rate but, if it did, you are entitled to have the entire account recalculated and the excess refunded, as well as the late fee. Your bank statements from Smile will back up your defence that the payment was made on time.

Don't waste any further breath on phone calls to the company: write to MBNA, setting out the details very plainly, and explain that you want to see a new statement of your account with interest calculated at the correct promotional rate, and any excess payment refunded within 14 days.

If you are unsuccessful, take your case to the financial ombudsman: I imagine the OFT would be very interested in hearing from you.