Not upheld: payment allocation and interest charges on credit card complaint against National Westminster Bank Public Limited Company (NatWest)

Decision detail

Summary

Miss B complained that NatWest unfairly applied her credit card payments, leaving a long-standing money transfer balance outstanding that continued to accrue interest, and that she was not allowed to clear that balance separately. The account terms explained that interest would be charged on outstanding balances and that payments would be allocated according to defined rules. Although both the purchase and money transfer balances carried the same interest rate, NatWest's allocation rules prioritised the purchase balance, meaning the money transfer balance persisted. The ombudsman found that NatWest correctly applied the account terms, that Miss B had sufficient information to understand how the account operated through terms, statements, and multiple explanations over the years, and that the payment allocation did not financially disadvantage her since both balances had the same interest rate. The ombudsman upheld NatWest's position that they could not manually direct payments to a specific balance, and found that NatWest's compensation of £175 and interest refund of £6.35 for service failings was adequate.

The Ombudsman's reasoning

The ombudsman found that NatWest's terms and conditions clearly explained how interest would be applied and how payments would be allocated. Since both balances carried the same interest rate, the allocation method did not result in Miss B paying more interest than she would have otherwise. The ombudsman concluded that Miss B had sufficient information over a prolonged period through account terms, monthly statements, and multiple explanations from NatWest to understand how the account operated. The ombudsman rejected the request to manually direct payments to a specific balance as this would require departing from agreed terms and standard processes. However, the ombudsman acknowledged service shortcomings in recent communication, which NatWest had already addressed through compensation.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website