mbna card 0% bt and 0% purchases

skaps

Have just bought something on 0% purchases until march 2011 and have also done a bt on 0% till april 2012. When I make the payments back will they go towards the purchases first and then towards the bt?
I know some cc companies have done this but dont know if mbna do this where they pay off the highest interest rate first

nomoneytoday

Law 101 of BT cards - don't spend on them after the BT is actioned...

Historically they would have a negative hierarchy, but believe they now have to change their ways.

skaps

the spend was before the bt

thenudeone

If there are multiple balances at the same rate they will pay off the offer that STARTED first (not necessarily the one that ends first).
https://wwwa.mbna.co.uk/apply/UKCCapp/Ctl/link?eid=FFA53196
So you could THINK you're paying off the offer that ends shortly, only to find it has reduced the balances on other offers which would have had lower rates for longer. Then the offer ends and you start paying interest on what you though you had cleared!

In this case the best solution is to wait til 1 day after the first offer ends then pay it off.

walzingmatilda

I was just going to ask a similar question.......I did a super balance transfer and have an outstanding balance of £1800 on that and the 0% rate doesnt end till next Feb, I have recieved an offer in the post from MBNA stating I can transfer a balance on a second promo rate (0% till Nov this year), if i transfer a balance of £500 to this are you saying that the £1800 will be payed off first followed by the £500 which will be accruing interest if it takes me longer than november this year?

Thanks

izools

Yes the £1,800 will be paid off first as that offer started first - until the £500 comes out of it's interest free period - at which point the repayments will revert to the debt that is costing more - the £500 - until that is cleared.

chattychappy

nomoneytoday wrote: »

Law 101 of BT cards - don't spend on them after the BT is actioned...

The law has now been repealed.

Indeed, in some situations the law can be the opposite. If you need to put purchases somewhere (and you're not paying off in full each month) then put them on the BT card. That way all your payment will go towards the higher rate on purchases rather than your low rate BT. If you put the purchases elsewhere then this can't happen.

izools

chattychappy wrote: »

The law has now been repealed.

Indeed, in some situations the law can be the opposite. If you need to put purchases somewhere (and you're not paying off in full each month) then put them on the BT card. That way all your payment will go towards the higher rate on purchases rather than your low rate BT. If you put the purchases elsewhere then this can't happen.

Although if you're not paying in full each month you'll still pay interest from the transaction date to the repayment date, so it will still cost a bit but nowhere near as dire a situation as before the new regulations.

Would require some serious math time to establish whether this is a profitible or loss leading thing to do in any given persons situation.

pauljoecoe

The key is not to mix your BT and your purchases. If you are able to use one card for each type of transaction.

chattychappy

izools wrote: »

Although if you're not paying in full each month you'll still pay interest from the transaction date to the repayment date, so it will still cost a bit but nowhere near as dire a situation as before the new regulations.

Yes, a bit. Much better than before where really the only way was to keep the balances separate.

izools wrote: »

Would require some serious math time to establish whether this is a profitible or loss leading thing to do in any given persons situation.

Yes, I have thought this through and in fact it's not so complicated. Also the saving is cumulative - ie increases month by month. If the following apply, there should always be a saving. If some don't apply, there could still be a saving or you could be worse off.

1) you can't pay off your purchases in full each month
2) the purchase rate on your BT card must be no worse than you can get on another card
3) your rate when your BT expires must be no worse than your purchase rate

By splitting transactions, you are effectively "contracting out" of a pure positive payment hierarchy. By combining, as you say, you will still pay a bit of purchase interest. You would pay that anyway unless you could pay your balance in full. But by combining, all of your payment will be applied to any outstanding purchase balance before your BT, so this purchase interest would be kept to a minimum. If you put purchases onto a different card, then the payment you make to your BT card can ONLY be applied to your BT and won't be available to reduce your more expensive purchase balance.

I think the best combo is to put purchases onto a separate card to the extent you can pay off the balance in full. Then put further purchases onto your BT card. Then you get 0% on purchases as far as possible, then normal purchase interest on the rest of your purchases (which can't be avoided) until paid off, and continue to get your promo BT rate on your BT. And as I say, the payment to the BT card will pay off the purchases as a priority.

As for the exceptions above:

1) obviously if you can pay for your purchases in full, then you should put them elsewhere to avoid any interest on these.

2) if the purchase rate on the BT card is higher than what you can get elsewhere, then the maths gets complicated. In some situations it is still worth doing because purchases will be paid off more quickly than if they were put somewhere else. Just depends on the figures.

3) If the BT has an expiry date and then goes to a standard rate that is much higher than the purchase rate and you anticipate not having paid much of it off, then it might prove better to keep the purchases separate. By separating them it is possible to knock back the BT balance faster and the purchase balance slower. This way when the BT expires, there won't be so much balance on the now higher rate. Again, maths is needed.

There are some marginal effects to do with the way some cards apply payments to statemented balances before unstatemented balances (so the payment hierarchy is not totally pure). This is a further complication for people who like to draw cash and then immediately send a payment (eg Zero/Clarity for foreign cash).

Willing to stand corrected if you can find any exceptions!

pauljoecoe wrote: »

The key is not to mix your BT and your purchases. If you are able to use one card for each type of transaction.

Not anymore, see above.

oki25

Keeping it simple. Your account will be paid of as follows

1st Most expensive debt, regardless of when it was put on the card (e.g yesterdays cash withdrawl)
2nd Promos, most expensive first (e.g 4.9%, 2.9% ect.)
3rd 0% free

The complicated bit....

If you have more than 1 offer at 0% then the money will be allocated to the balance on the promo rate that started first.
If they started on the same date, then whichever has the highest contract rate when the promo ends will be paid off first. For example if you have a 0% BT and a 0% retail that start on the same date, its most likely to be the bt that gets paid off first as it usually has a higher contract rate. call 0800062062 and ask for a summary of payment allocation on the account and then can tell you.