Not upheld: payment allocation on credit card account complaint against NewDay Ltd

Decision detail

Summary

Mr C complained that NewDay Ltd incorrectly applied his credit card payments to a promotional 0% balance transfer instead of to his higher interest retail purchase balance. Mr C held both a £1,179.24 balance transfer at 0% for 6 months and a retail purchase balance at 34.512% interest. NewDay applied Mr C's payments to the statemented balance first, then to higher interest rate balances, in accordance with the account terms and conditions. The ombudsman found that NewDay's payment allocation was correct, that Mr C was clearly informed of the allocation methodology through written terms and direct communication, and that no further action was required beyond the £69.14 interest refund already provided as a goodwill gesture.

The Ombudsman's reasoning

The ombudsman found that NewDay's terms and conditions clearly set out that payments would be applied to the statemented balance first, and then to balances attracting higher interest rates before those attracting lower interest rates. The account statements showed that NewDay applied Mr C's payments in accordance with these terms. Mr C was clearly advised of the payment allocation methodology both in the written terms and through direct communication via chat and phone. While the ombudsman acknowledged that Mr C would have preferred a different allocation method to reduce his interest charges, this preference did not align with the contractual terms he had agreed to. The ombudsman determined that NewDay acted fairly and reasonably, and that the £69.14 interest refund already provided was sufficient.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website