Possible Repayment order breach?

Ignatius_A

I just tried to log into my egg account and saw the following:

Your repayments will be applied to the highest rate balance first. Where introductory rates apply to balance transfers and purchases, your repayments will be applied to balance transfers first.

Now forgive me if i've misunderstood the impact of the recent legislation, but this looks to me that Egg believe there is a loophole in the interest repayment order where the rates being repayed are "introductory rates"

Of course it could be badly worded, and only mean that balance transfers are paid off before purchases where both have the SAME introductory rate.

If this is the case then i would suggest that to pay off low rate introductory balances on balance transfers which have longer to run than introductory balances on purchases may not be against the letter of the policy, but it certainly seems agains the spirit.

The above logic (the best sense i can make of the quotation except to believe that they ignored the government agreement about positive repayment hierarchies) suggests that the advice here:

http://blog.moneysavingexpert.com/2010/03/18/no-more-never-ever-ever-spend-on-a-card-youve-done-a-balance-transfer-on/

may not be valid. To illustrate

If credit card A has a 6 month 0% interest on spending and a 12month 0% on balance transfer, ALL your 1st 6 month's money will go to paying off the balance transfer. After those 6 months, your payments will start to go against the spending on the card (the highest interest rate balance), but that's on the WHOLE SUM - none of it will have been repaid at this point and so you'll be paying interest on that amount until it's paid down.

It might be better than it was - but it looks like there's still some way to go....

Consumerist

To avoid interest payments altogether, it is still generally best advice to put purchases on a separate card to cash (including BTs) transactions unless either (a) both cash and purchase promotions end at the same time or (b) you settle both promotions in full when the first promotion has ended.

I think many people are going to come unstuck over their interpretation of the new rules for payment order.