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When the modern credit card meets an age-old philosophical problem
This letter, when originally sent, received no response. When I chased it up, by sending it again, I found out that it had arrived but had not been passed to anyone to deal with. I suspect that they did not quite know what to make of it. I was awarded fifteen pounds as an apology for their mistake. Unfortunately, the reply to my query was less encouraging. They did not plan on changing the system, though they did offer to calculate my interest whenever I asked them to.
I eventually paid this credit card off, though I did have to make one payment of eighteen pence!
The Co-operative Bank VISA Centre
P.O. Box 150
1st November 1999.
My visa number omitted here
Following a telephone conversation with one of your customer service staff about the above card, I thought I would write to you in order to express my views on the billing for my VISA Gold Card. I hope you will be able to use some of the points in this letter to improve the service you offer.
Last month, I received a bill for £2239.08, which was to be paid by the 20th of October. On the 11th of October, you cleared a payment of £2239.08 against the account. Given the above facts, most people would assume that the balance on my account should now be zero. However, this month’s bill showed that the outstanding balance on the account is now £12.22. Before you jump to the conclusion that I have not understood why this is the case, allow me to assure you that I had guessed the reason before the customer services staff-member explained and confirmed this for me on the telephone yesterday. So, in the days between my receiving the statement and sending the payment, interest was accumulating; there is no interest-free period on the account and so it is just the way it works.
As a customer, I find it difficult to accept that paying a bill in full should not clear an account. I also find it difficult to accept that the only way to "zero" the account is actually to overpay the account, which is what your customer services advisor advised me. I am not sure whether your interest-charging policy is common, but it is probably the most thought-provoking policy that I have come across.
Having consulted some text books, I found that this policy is the equivalent of the Achilles Paradox, an age-old philosophical question. Essentially, if Achilles is chasing after a moving tortoise and, for every step the tortoise makes, Achilles attempts to close the gap between them. Achilles can never reach the tortoise. This is because no matter how fast Achilles runs at the gap, the tortoise is still moving and will be further forward after the time Achilles has spent attempting to close the gap.
So, all the time I am trying to pay in full the bill you give me, you will be charging me interest and, no matter whether I pay 100% of what you ask each time, it is not possible to reach zero. I never studied Philosophy, but sometimes I wish that I had!!!
As it is actually possible for a man to beat a tortoise in a race, so is it possible for me to beat your interest accumulation. I must work out what the balance will be at the moment you receive my payment – or pay more than you could ever ask. The latter seems unfair and the former would require a complicated calculation on my part. Perhaps you could include, on the statement, an estimate of what the balance would be on the repayment date, so that people, who wish to clear their account, will not have such a moving target to aim at.
As another alternative, perhaps you could offer a small rate of interest on money which is overpaid so that it seems less of an insult that this is, practically, the best way to clear the account. A final alternative would be to waive interest if an account is cleared before the payment date or, perhaps, before an earlier date, for instance only a week after the statement.
I would appreciate any comments you might have on any of the points raised in this letter.
At this point, I should mention that, since the smallest unit of payment is 1 pence and this is indivisible, it will always be possible to clear the account. However, it will take about 2 or 3 months longer than the initial payment of 100%. I do not use their credit facilities any longer.
Written: 1 November 1999
Posted: 8 December 2000