Balance Transfer Warning

confusedvictim

In January, I took the opportunity of an interest free offer from Hilton HHonors card run by Barclaycard. I had already made a purchase of a product of just over £3,300 on another card, and decided to make the transfer so I could pay off the amount interest-free over 9 months. There was a small arrangement fee, but that was OK. On the first statement I received after the transfer, I paid off the amount of that month's purchases on the card, plus £600 towards the interest-free loan. The next month, I was charged interest. When I asked why, they said that as I had not paid off the balance, I was charged interest on the transactions for that month. It would seem that unless you use the card for nothing else, they will charge interest. Of course you are not going to pay off the whole amount, as that woudl defeat the object of the interest-free loan.

I have raised a complaint with the Financial Ombudsman, but felt that everyone should be aware of this practice. If you use a card with an interest-free load, DO NOT use it for anything else.

sheba

I'm afraid that's always been the case- you should never spend on a card you've balance transferred to- the mighty Martin has been saying it for years!! Sorry you've been burnt

michaelvintner

Possibly not as bad as it used to be. You have been charged interest on the stuff you purchased but at least now that all payments go towards paying off the debt with the highest interest rate you should find that next month you will not be charged any interest as you have cleared off that part of the balance.

It is no longer true that you cannot spend on a balance transfer card but it is probably better not too.

thenudeone

This has always been the case and is in the T&Cs of every card AFAIK.

chattychappy

michaelvintner wrote: »

Possibly not as bad as it used to be. You have been charged interest on the stuff you purchased but at least now that all payments go towards paying off the debt with the highest interest rate you should find that next month you will not be charged any interest as you have cleared off that part of the balance.

It is no longer true that you cannot spend on a balance transfer card but it is probably better not too.

Spot on. In fact there are situations where it is certainly worth mixing the transactions. The maths can be complicated, but the most obvious category of people are those who have a 0% BT type deal running AND need to make purchases where they cannot pay off the balance in full. In this situation it is generally worth putting the purchases onto the BT card so that all of their payment goes to interest bearing purchases first. If no purchases were put onto the 0% card, then all of the payment to that card would go against the 0% balance.

confusedvictim wrote: »

When I asked why, they said that as I had not paid off the balance, I was charged interest on the transactions for that month. It would seem that unless you use the card for nothing else, they will charge interest.
...
I have raised a complaint with the Financial Ombudsman,

But why? It seems you now appreciate what you have signed up to. So what are your grounds for complaint - that you don't like the deal?

sharpy2010

confusedvictim wrote: »

I have raised a complaint with the Financial Ombudsman

You need to actually read the terms and conditions of the product that you have signed up for.

Would you go into McDonalds, as an example, and upon asking for a cheeseburger, complain to the manager that you were given a cheeseburger?

Because it amounts to the same thing; You asked for something, and you got it. It isn't the companies fault that you don't fully understand what it is that you have and how it works, is it?

If the FOS don't tell you the above in no uncertain terms, they'll certainly be thinking it.

bouncydog1

If you use a card for BT and purchases, you should set up a spreadsheet with two columns so that you can monitor how much is being paid off each debt e.g. if purchases are at 10% and BT's 0%, then you will calculate the interest on the purchases and allocate the payment to the purchase column. That way there is little chance of allowing your arrangement to over-run and incur huge amounts of interest.

confusedvictim

Thank you for all the advice. Yes, I am probably like most people and don't read all the small print. Logic would say that if you continue to use a card as normal and pay off your purchases, and an amount of the interest-free amount, you would not get charged interest. But, of course I am dealing with a bank. What should have happened in the balance transfer offer letter that was sent is that there should be a statement that said "If you take advantage of the offer for balance transfer at 0% interest, you will be charged interest on your tranactions if you still use the card for normal purchases". I don't think this would ever happen...

BugsyBrowne

sharpy2010 wrote: »

You need to actually read the terms and conditions of the product that you have signed up for.

Would you go into McDonalds, as an example, and upon asking for a cheeseburger, complain to the manager that you were given a cheeseburger?

Because it amounts to the same thing; You asked for something, and you got it. It isn't the companies fault that you don't fully understand what it is that you have and how it works, is it?

If the FOS don't tell you the above in no uncertain terms, they'll certainly be thinking it.

:rotfl::rotfl::rotfl:

thenudeone

jull wrote: »

Only way to never pay anything for using a credit card is, don't use it.

Or understand the terms perfectly and play them to your own advantage. Much more fun:)