Balance Transfers and Purchases

dawebuser

I have just got a MBNA Card with 0% on BT for 9 months and have a question.

If i make purchases on the card as well do the credit card company know these are seperate as i intend to pay them off in full. Basically if i spend lets say 100 in new purchases and have 500 on which is the BT and i decide to pay 120 do i still pay no interest on the remainder for 9 months.

Cheers
Sorry im new to this. ;D

johnllew

Generally, it's not a good idea to make purchases when you're on a 0% BT promotion, unless it's the rare case where the 0% deal includes purchases.

What usually happens is that your monthly payments will first be set against that part of your balance with the lowest interest rate. So your purchases will remain included in the balance incurring interest at the standard rate.

Unbelievable_2

Any payment you make will be applied to reduce the balance at the lowest interest rate - ie. if you pay your £120 it will be applied to reduce the amount owed on the BT, so you will owe interest on the purchases.

EDIT: Echo, echo, echo!

Milarky

AFAIK MBNA have never offered 0% on purchases along with balance transfers. In fact it's a marketing trick of theirs to offer cashback on purchases with a certain card which should be deferred until the balance transfer period has run out and the balance paid off. Just look at all their current offers here for instance. All MBNA cards appear in the body of the list because cards with 0% on purchases rank more highly. [FT.com is not offered as a definitive listing here, merely as being quite 'representative' of the general picture]

Opps!   :-X Shot down in flames!  :-[ ... there is actually an MBNA card which does 0% on purchases after all!

http://credit.ftyourmoney.com/cards/CardDetails.asp?CardID=1119&ProviderID=553&Adverse=0

..not sure how that would work. By paying off the 'expensive' BT of 7.9% ahead of purchases or the other way around??

Clariman

Never use a 0% BT card for purchases UNLESS it also offers 0% on purchases, otherwise you will get hit with interest charges every month on the purchase costs.

Also watch out for cards that offer 0% on Purchases as well as 0% on BTs. Sometimes the card issues (e.g. Egg) offer a shorter introductory period on purchases than they do on BTs, which means that you start getting hit with monthly interest charges between those 2 dates if you have made purchases. To avoid this, either don't make any purchases on this card (and you get the full length of 0% on BTs) ... or pay off the full card when the expiry of the shorter 0% on purchases ends.

A good approach is to use one set of cards for exploiting 0% on BTs and a separate card for purchases (ideally a cashback card that you pay off every month).

Clariman

Milarky

. To avoid this, either don't make any purchases on this card (and you get the full length of 0% on BTs) ... or pay off the full card when the expiry of the shorter 0% on purchases ends.

In principle, you can 'clear' the combined Egg card balance [purchases & BTs] at 6 months but immediately take an equal BT out for the last two months of the promotion [not spending on the card during this latter period]