HSBC - Interest on repaying BT's

loonee

I have just made a balance transfer onto my HSBC credit card and have just read the letter that went with it.
"Payments are applied to higher-rate standard balances before any reductions are made to lower-rate special balances.This means that in the long term, you pay less interest overall.
Payments that you make over the minimum amount will be applied to all purchases and cash advances, including any transactions made after your last statement. This is before any reductions are made to your balance transfer".
Is this unusual as I thought all credit card repayments took the lower rate first leaving the higher rate purchases sitting on the card for as long as possible. This would seem to suggest that you could still use the card for purchases even if you have a balance transfer on it.
There isn't a 0% transfer involved here but HSBC is a lower rate than A & L which I have just closed.

charlie12

Yes, HSBC are one of the very few card companies who apply payments in your favour. You can make purchases on a card with a transferred balance on it, and the purchase won't be "locked" at the higher purchase rate. However, purchases will still incur interest from the date of the transaction (no interest free period) so it's best to avoid making purchases if at all possible. Use a different card to get the standard interest free period for purchases and potentially other benefits such as cashback.