What does this mean?

celiar

Hi all,

After reading Martin's articles on low rate balance transfer cards I applied for an M and S &more card so that I could transfer a couple of balances I have on a Barclaycard and a Debenhams card, both high rate interest. As the rate of the new card will be 3.9% for the life of the balance transfers I was really chuffed that I'd finally done it (I obviously plan to put it in the drawer and not use it for anything else). I only have two relatively small balances on these cards (under £500 on each).

I've been accepted and the paperwork came this morning. I have to sign it and send it back to them, then they will send me my card. However reading through the credit card agreement info I am puzzled. Can anyone explain this please:

>>Other financial information

Total Charge for Credit £480.62. The Total Charge for Credit is based on the assumption that you spend your credit limit (or in some cases an assumed credit limit of £1,500) in full on Purchases at the start of this agreement and then repay it by 12 equal monthly repayments with interest being charged during that period at the simple annual rate for Purchases, taking no account of an introductory rate. When we send you a new Card, the Total Charge for Credit figure shown will reflect your current card limit and current simple annual interest rate for Purchases.<<

Now I could be reading this completely wrong, but it sounds to me as if, upon my accepting the terms of the agreement, they are going to add £480.62 to my bill before I start!

Advise please?

Celiar

Mo'_Money

I'm pretty sure they are just using that for illustative purposes - i.e if you had a credit limit of £1,500 and maxed that out straight away, in a year, you would incur £480.62 in interest...

celiar

It doesn't say it's for illustrative purposes and I have to be sure before I sign it.

johnmoney05

All credit card credit agreement have this....

thumshie

The Total Charge for Credit is based on the assumption

As it's an assumption, it doesn't apply to everyone.

kenshaz

Ring or email them to confirm.

King_Of_Fools

It is definately just a very badly worded example. You will find that the government has forced this clause into all new credit card agreements!

Agenda_109

Celiar,

The figure you mention is merely an illustration showing the interest you would be charged (assuming the simple annual rate @ 15.8%) if you were to borrow all of your available credit limit over a period of 12 months, making 12 equal monthly payments in order to clear the debt.

By using the table I have posted in the following thread on 01/11/06:

'Credit Limits on New M&S 3.9%LOB/12m 0% Purchases Card'

Looking up the interest figure you refer to, your credit limit should be £5,500.

Hope this explains things.

celiar

Agenda_109 wrote:

Celiar,

The figure you mention is merely an illustration showing the interest you would be charged (assuming the simple annual rate @ 15.8%) if you were to borrow all of your available credit limit over a period of 12 months, making 12 equal monthly payments in order to clear the debt.

By using the table I have posted in the following thread on 01/11/06:

'Credit Limits on New M&S 3.9%LOB/12m 0% Purchases Card'

Looking up the interest figure you refer to, your credit limit should be £5,500.

Hope this explains things.

Thanks for explaining that. £5,500 is more than I need so this will fit the bill nicely (so to speak).

Celiar