Irritated!

fleagle21

Here's the story...

Got a card with MBNA, always pay it off in full as it's our 'purchase' card. Received a letter saying that from sept, they would pay off the items that cost you the most first and and until oct '11 we could also have 0% balance transfers.

So, did a balance transfer. Statement came in, paid off all purchases for that month, plus the BT fee. Leaving just the BT amount, at 0%.

This month, statement came - with an interest charge. Didn't make sense to me, as I'd paid off the purchases as usual (so wouldn't incur interest on a normal statement) and the remaning balance was at 0%.

BUT, so they said when I phoned, interest accrues at a daily rate so the interest amount is what has built up on purchases as there is still a balance on the card all the time (i.e the BT - 0%).

Is it me, or is this a bit unfair? Because if I'd had just purchases, despite this daily rate thing, I'd still pay no monthly interest.

Anyway, lesson learned, and only £10 'lost' so it could have been worse - won't be doing that again!

NekoZombie

This is a wide spread 'con' on the part of credit card companies. It's all to do with the order in which they allocate payments - and actual purchases are always paid off last. Basically, the payment that you made has gone against your balance transfer - as will any other payments you make, until the balance transfer is completely cleared. You're now stuck paying interest until the card is completely cleared. In future, if you ever do a BT on a 0% interest rate, you can NEVER use the card again for purchses until you have paid off the BT.

fleagle21

No, that's what I'm saying - MBNA, in september, started this new payment order thing, most expensive first. Yet, I was still charged interest for the days that the purchases were on the account at the same time as the BT, if you see what I mean.

NekoZombie

Lol, so they replaced one con with another! typical!

fleagle21

NekoZombie wrote: »

Lol, so they replaced one con with another! typical!

Exactly! And no amount of my arguing could get the girl on the phone to see my point... anyway, hope this will help someone else, the girl on the phone openly admitted "this has confused a lot of our customers" :eek:


EDIT: Better just add to this, before someone picks up on what we've said... yes, I know it's only a con if you use the the card, no-one forces you to, etc etc!

Hax

I'm sure I've read something similar on here before and it essentially boils down to the balance transfer being charged to your account instantly, and not on the next statement date (in much the same way as cash withdrawals). Therefore, as you have an existing balance, you get changed interest on anything else that you buy - the same as if you had a "normal" outstanding balance and then added to the debt.

Hope that makes some sort of sense - my brain's getting a little weary...

fleagle21

Hax wrote: »

I'm sure I've read something similar on here before and it essentially boils down to the balance transfer being charged to your account instantly, and not on the next statement date (in much the same way as cash withdrawals). Therefore, as you have an existing balance, you get changed interest on anything else that you buy - the same as if you had a "normal" outstanding balance and then added to the debt.

Hope that makes some sort of sense - my brain's getting a little weary...

Yes, sounds about right - because when I asked about future purchases, even if I pay them off month to month (as I would normally, and not incur interest), because the BT is sat there, I'll still pay the daily interest on purchases.

The CC company don't make this one too clear whilst emphasising the "look at us being so kind and paying off high cost transactions first for you..." LOL

EDIT: Again, before anyone says anything, I'm fully aware CC companies aren't there to be kind, they're there to make money!

chattychappy

You didn't pay off your statement in full. So there is no "grace" period - ie no interest free period on purchases.

The change in T+Cs just means that the payment when it arrived was applied to the purchases and not the BT.

So you were charged interest on the purchases from when you made them until your payment arrived. As you make further purchases, you will pay interest on them too - until payment arrives. This will only stop after you've cleared the whole balance (including the BT), or you stop making purchases and send enough payment to cover the interest.

It is correct - you are not paying interest on the BT and they are applying payments to the purchases first. Just by taking the BT you are failing to pay off in full, so lose the "interest free" period on purchases.