0% balance transfers and puchases - watch out!

justride1000

I've just been stung with an MBNA 0% deal. They offer a 12 month 0% deal on balance transfers and 6 months on purchases.

I transfered £3000 to an ISA first and then decided to take advantage of the 0% on purchases by buying a holiday (£1500). Just prior to the 6 months finishing on purchases, I cleared the £1500.

When my statement arrived I saw that I was being charged interest on the outstanding balance of £3000. When I challenged this I was told that any payments to the account are taken off the balance transfer first therefore the only possible way I could avoid paying interest was to clear the entire account! They acknowledged it wasn't good but stated that's just how the banks do it!

Needless to say I have now cleared the account but please be careful when trying to stooze from these deals - if the interest free purchase period is shorter than the balance transfer one, then the only way to avoid paying interest will be to clear the entire account!

NickX

Welcome to the forum, and I know this won't help you now but one of Martin's golden rules is to never spend on a card that you have transferred a balance to. Unfortunately you have fallen into this trap and now know why.

It is a ploy by the Card Companies to get the Purchase Balance trapped accruing interest until you settle the balance in full and does come up here quite regularly.

As I think you have sussed, the only exception to this golden rule is when the Balance Transfer promotion and Purchases promotion are for identical lengths of time.

Angie101

Hi

Sorry to butt in. Think I have got a similar problem. I cleared my visa card and recently bought a present for a collegaue using the card. I paid for my visa bill online but only part-paid it as my collagues had given me some money towards it and I meant to go to tha bank and pay directly. I forgot. Stupid but the sum was £50 so I thought interest would be low.

The interest came to just under £7. I called my bank and they said because I bought a computer using my card two weeks ago (mine died and I planned to BT to my Virgin that are giving me a special deal . . .this item was not included in my last bill) I accured interest for that because i broke the terms of conditions by only part paying my previous bill

I have never paid interest on items I bought between bills. Is this right?

Can anyone advise? Thanks

jonesMUFCforever

The rule is quite clear - never ever mix balance transfers and purchases deals on cards unless both deals end on the same date.

elle_gee

Is the Nationwide CC not an exception to this rule? All the promo paperwork I've seen for it mentions paying off the most expensive borrowing first, ie the purchases before the balance transfers.

Or have I got this wrong? (quite possible!)

http://www.nationwide.co.uk/creditcard/GoldCard/order_of_payments.htm

NickX

elle_gee wrote: »

Is the Nationwide CC not an exception to this rule? All the promo paperwork I've seen for it mentions paying off the most expensive borrowing first, ie the purchases before the balance transfers.

You are indeed quite correct.

Nationwide is an exception to this rule.

Indeed Nationwide does offer some features that work in the customer's favour including commission free foreign currency transactions.

However, they tend not to offer quite as long promotions as other providers.

dylanuk

Yes, this is because of the 'allocation of payments' clause listed in every credit card's terms and conditions: http://www.credit-card-comparison-online.co.uk/faq/0-balance-transfer-purchase/allocation-of-payments-clause.html

Credit card companies like to order your payments towards lower rate transactions first, hence why cash withdrawals on credit cards are such bad news (aside from the massive interest charges and fees).

Both Capital One (15 months) and Halifax (10 months) offer equal length 0% bt & p deals - Halifax is probably a bit more accessible if you're credit record isn't perfect.