'No more 'never, ever, ever, spend on a card you've done a balance transfer on' blog

Richard019

jagu wrote: »

I'm not so sure this is a good thing. Zero percent balance transfers exist because the card companies know most people won't avoid spending on their card once they've transferred the balance. Or enough people to subsidise the operation, at least.

I suspect zero percent balance transfers will now disappear and those of us clever enough to read MSE and keep these cards in a drawer while we clear the balance will no longer have the option.

I think it's more that they hope we can't pay off the BT at the end of the 0% period and they then make the profit from the interest instead of their competitors.

Richard019

JimmyTheWig wrote: »

But you're still going to pay it off one day...

At some point you're going to be paying off the BT as well so you will then clear the card 2 months running. I don't see there being much of a difference between the BT ending and the time someone is going to take to pay off a large purchase, at least not with the BT offer ending first. Of course LOB promotions are a different matter entirely.

MSE_Martin

irrelevant wrote: »

I think I've got it - if, say, I have a card with a hefty but 0% BT on it, and need to spend a sum which will take several months to pay off, using minimum payments on both it will be better to put it all on one card

e.g. with two cards:
card 1, £1000 0% min payment £50
card 2, £1000 18% min payment £50

So I'm only paying £50 a month off the expensive debt, and probably getting interest of almost that much added back on.

but with one card
£1000 at 0%, £1000 at 18% min payment £100.
The full £100 will comes off the balance that's getting interest charged on it, so that part will be paid off faster, and will therefore charge me much less interest.

Gotcha!

yep that was what i was getting at

MSE_Martin

Hi

As for disappearance of balance transfers - i think we will see an impact but not a huge one. The go to rate is the big profit angle here - repayment hierarchy was a nice little earner on top.

Paulgonnabedebtfree

MSE_Martin wrote: »

Hi

As for disappearance of balance transfers - i think we will see an impact but not a huge one. The go to rate is the big profit angle here - repayment hierarchy was a nice little earner on top.

I suspect this will lead to some more rate jacking Martin. Although the right to refuse now exists, not everyone is in a position to do so and to lose the credit facility. Although I've never been caught out myself with the payment hierachies, it's easy to see how it could happen.

RabbitMad

I don't think the following sentence is very fair

" a nasty piece of commercial genius has allowed plastic providers to unfairly delve into their customers pockets for years"

Its seems very fair to me. I would think that its up to the lender how they allow people to borrow.

I do wonder what the unintended consequences of this will be - it could be less balance transfers, it could be higher rates but it will be something. As we've seem with unauthorised overdraft charges, the banks (halifax in particular) have introduced much steeper charges but made them look a lot smaller and fairer.

JimmyTheWig

jagu wrote: »

I'm not so sure this is a good thing. Zero percent balance transfers exist because the card companies know most people won't avoid spending on their card once they've transferred the balance. Or enough people to subsidise the operation, at least.

I suspect zero percent balance transfers will now disappear and those of us clever enough to read MSE and keep these cards in a drawer while we clear the balance will no longer have the option.

Same old story, though, isn't it.
Unfair bank charges, unfair airline charges, now unfair repayment charges. There's always someone who is able to play the system not wanting it to become fair for everybody as they want to carry on benefitting from the unfairness.
Well, to me that's just unfair!

Edit: Cross-posted with RabbitMad, saying the same thing from the opposite angle!

RosieJ_2

This change to the credit card hierarchy is good news, but I got duped by being persuaded to buy identity insurance. They don't tell you in any of the terms and conditions that the monthly payments will come off your credit card and you will therefore be charged interest on the insurance you have taken out.OK it was £79 per year and it will have cost another ~£12 by July which is the earliest date I can cancel the insurance. I'm still miffed at falling into the trap.