Allocation of payments - MBNA, when the rates are the same.

richardw

If you have purchases at 0% until April and balance transfer at 0% until May, do they allocate the payments against the purchases balance because this is the first to become expensive?

bouncydog1

I think you will find that they allocate the payments against the offer that expires first, until the rate goes up on it, at which point it will be allocated against the deal with the highest interest rate. Have a look at their website to be sure.

fozmcfc

This is the explanation from the website

If you have two or more promotional offer interest rates on your account at the same rate, e.g 0%, then your payment will go towards paying off the promotional offer with the earliest start date. If the promotional offers both started on the same day, then the promotional offer that will become the highest standard interest rate when the promotional offer ends will be paid off first.

Basically if you have 2 rates at 0% the one started earliest will be paid off first.

richardw

So appears then that I have to wait for the purchase to become more expensive than the BT and then pay the money for the purchase to clear that.

fozmcfc

I wish I had saved it but I remember another money/financial based website pointing out that consumers were being caught out by thinking it was ok to do 0% purchases and BT's on an MBNA backed card, but not realising that the money going to toward the payments were coming off the earliest start date first.

So for example.

0% £1200 BT started in June 2010 ending in May 2011 next year.

0% £500 Purchases started in August 2010 ending in January 2011.

All payments are are going towards the 0% BT first, so come January, those purchases will suddenly accure interest if you haven't paid the £1200 BT off first (unlikely as you have until May).

So come January, the purchases become the first thing to pay off, but unless you can afford to pay them all off, you're going to start getting interest on them.

So to pay everything without interest you need to have made payments of £1700 by January, thus at the least wasting 4 months of the BT period. Or pay £500 off ASAP in Jan to get just a day or 2 interest.

richardw

fozmcfc wrote: »

Or pay £500 off ASAP in Jan to get just a day or 2 interest.

Yes, seems that's the way forward.

whatyadoinsucka

my virgin (MBNA) currently have a deal for
spend over £250 0% till nov 2011
or spend under £250 0% till Aug 2011

I had to give virgin a call due to needing a new card after using it to deice my windscreen
anyway i asked and they said if you make both types of purchase, the later balance ie over £250 in paid off first so under £250 spends will start incuring from aug onwards

therefore work out when you can afford to pay off by and then use either/or

thenudeone

Do not rely on MBNA (aka Virgin) staff, who get this wrong too.
I always ask any questions like this through their secure messaging facility and the print a copy of the response to a pdf file (using Novapdf or dopdf) so that there is never any doubt of what their staff told me.
If you act on the reply they give you, will be in a very strong position to complain if it later turns out that they gave incorrect information.