Spending on a 0%APR card after balance transfer?

dmsu86

Ok, need some advice guys and girls.

I got the virgin 0% apr card and got the debt (£1800) transferred over to it. (all in her name)

Now, this is the first month and i find out she has just paid £70 on a pair of jeans on this card! am abit p*@%*d off to be honest. (after telling her not to spend on it)

Now, what will happen? i've just read that its 0% interest on purchases inside the first 3 month, so does this mean that this purchase will NEVER accrue interest? or does it mean no interest will be charged aslong as it is paid off within the 3 months and if not it will then start accruing interest? will it affect the debt in anyway?

I will cut the card up myself tonight! :mad:

Also with virgin the typical rate is 16% so does that mean after 3 months, if the whole debt isnt paid, which i very much doubt it will be, that the £70 will be hit with the 16% interest?

so 4th month - £70 x 16% = £11.22 TOTAL £81.22

will month 5 be 16% on the £81.22 or the £70?

Any advice appreciated people! thanks

[EMAIL="abuse@moneysavingexpert.com?subject=Reporting post http://forums.moneysavingexpert.com/showpost.html?p=12385699"][/EMAIL]

mrposhman

Ok I think credit cards are set up to pay off different balances in a certain order (usually the order that maximises their revenues!!).

So your balance transfer will be first to be paid off as they will not make money on it, hence ALL of your current repayments will be paying off the £1800.

Which leaves this purchase to be paid off after. Unfortunately that means that once your 3 months at 0% are over they will be charging you interest and it will be charged until after you have paid the £1800 off so could add quite a bit of interest on i'm afraid. It all depends how quickly you expect to pay it off though.

dmsu86

but what about the accruing interest on the £70?

so 4th month - £70 x 16% = £11.22 TOTAL £81.22

will month 5 be 16% on the £81.22 or the £70?



I reckon the debt will be paid in under a year. so well withing the 15months 0%apr on the BT. this £70 wont affect the 0% on the BT in anyway will it?

DestroyingAngel_2

Actually, mrposhman that's not quite right.

DMSU86, Virgin is serviced by MBNA so their payment allocation rules apply. From what you said, there is a 0% promotion on retail purchases for 3 months, and 0% on balance transfers for however long. Under the payment allocation rules, if there are 2 promotions at the same rate, whatever you pay back will first pay off the promotion that ends first. Assuming of course that your Balance Transfer rate goes on for longer than the Purchase rate, the jeans will be paid off before the balance transfer.

Your payments would be like this:
1st month = £5 + handling charge (say 3% of £1800 = £54) = £59.
2nd month = £25
3rd month = £25
Total after 3 months: £109
(assuming you don't make any additional payments)

So, at the end of the 3 months, you'd have paid off more than the cost of the jeans, and thereafter you'll be paying off the balance transfer. Therefore there'll be no interest charged.

Hope this helps.

mrposhman

Oh right, I was under the impression that the payment rules were set up to make the most money, hence why I thought you pay off the 0% first and then accrue the interest on anything else you spend.

Learnt something new today.

The OP will be happy as that means no interest will be paid!! It won't affect the BT.

Also, just remember that your APR rate is annual and not monthly so monthly you will be charged about 1.3% (if you have an interest gaining balance) but the actual details will be spelt out in the T+C's.

bethanyrayne

dmsu86 wrote: »

but what about the accruing interest on the £70?

so 4th month - £70 x 16% = £11.22 TOTAL £81.22

will month 5 be 16% on the £81.22 or the £70?



I reckon the debt will be paid in under a year. so well withing the 15months 0%apr on the BT. this £70 wont affect the 0% on the BT in anyway will it?

It's not 16% a month it's per annum!!