Question about allocation of payment

maddipops

I have a barclaycard 6.9% deal for the life of the balance, the balance is approx £7500.

I make a minimum payment on 31st of each month of £165 approx, approx £44 of this is interest. THis means that around about £120 is coming off the debt each month.

Due to personal circumstances taking a turn for the worse, I now have to try to free some cash up.

I was thinking, if I was to put £115 worth of purchases onto my card, around about the 25th of each month, when I make the minimum payment a week later would I be right in assuming that the minimum payment will clear my purchases first, thus not affecting the interest I pay each month, nor affecting my balance transfer deal? Due to the new allocation of payment rule.

I of course realize there may be interest charges for the 5 or so days the purchase is there, which will be miniscule.

any advice will be greatly appreciated, this idea will effectively help us keep our heads above water till our circumstances improve again.

YorkshireBoy

I believe you'll still have a small amount of interest payable each month going forward. This is because if you don't settle your bill in full each month you lose the "up to x days interest free" on purchases.

The interest amount should be very small though.

maddipops

thats the purpose of leaving it till as close as possible to the minimum payment date, so the 6.9% wont be affected?

Degenerate

Be careful with this, read your T&Cs thoroughly. Although the order of payments has changed to apply to the highest interest first, those I have checked still override this by applying to the last statement before recent transactions. If you're making the purchases a week before the payment due date, they'll be on your next month's statement, not the one which your payment will be allocated towards. Your payments may therefore end up reducing your cheap 6.9% debt whilst the recent purchases carry forward at the standard APR.

The best bet to buy you a bit of breathing room would be to put your spending on another card, clearing it monthly and utilizing the full up to 56 days (or whatever) interest free period. I take it you have no other CCs? If your credit rating isn't up to getting another "prime" card, you might consider applying for something like Vanquis. With their horrendous APR they're terrible, terrible cards to borrow on, but if you clear it every month it shouldn't matter.

Of course, this only buys you a month... If you have an ongoing income shortfall you'll need to look at your incomings and outgoings in depth to tackle it.

maddipops

Thanks for the advice. Ive just seen this on their website which seems to go against the allocation of payment rules?

What about balance transfers?
Tempted to transfer your credit card balance to us, we'll promise you a competitive balance transfer rate. You may have to pay a handling charge, but we'll make this clear when we make you an offer.

When you start making payments to your new account with us, they will go towards paying off your balance transfer first. This means that any further purchases you make will be charged at your standard APR. Once the transferred balance is cleared, your repayments will go towards your new purchases.

http://www.barclaycard.co.uk/personal-home/credit-guidance/credit-card-guide/how-much-will-my-credit-card-cost-me/

Confused!!!!

YorkshireBoy

I wonder if that's out of date information. If it is, you may want to bring it to their attention.

It certainly goes against the new regulations, the wording in the summary box (and so presumably the T&Cs as well?...have you checked yours?), and that found in the FAQ section here...

If you do not pay the total outstanding balance in full by the payment due date, we will apply the amount you do pay to reduce higher interest rates balances before lower interest rate balances. This means that you will pay off any cash transactions and purchases before you pay off any of your balance transfer.

http://ask.barclaycard.co.uk/help/brochure/1_creditcards/affectcurrentbalance

maddipops

Thanks I've bookmarked that, which completely contradicts the info I found. I guess it may be out of date. Only one way to be sure. I will make a small purchase on 25th may, my statement date is 3rd June, I will then examine the statement to see how they do it.

You've both been really helpful thanks.

pete007

Degenerate wrote: »

Be careful with this, read your T&Cs thoroughly. Although the order of payments has changed to apply to the highest interest first, those I have checked still override this by applying to the last statement before recent transactions. If you're making the purchases a week before the payment due date, they'll be on your next month's statement, not the one which your payment will be allocated towards. Your payments may therefore end up reducing your cheap 6.9% debt whilst the recent purchases carry forward at the standard APR.

The best bet to buy you a bit of breathing room would be to put your spending on another card, clearing it monthly and utilizing the full up to 56 days (or whatever) interest free period. I take it you have no other CCs? If your credit rating isn't up to getting another "prime" card, you might consider applying for something like Vanquis. With their horrendous APR they're terrible, terrible cards to borrow on, but if you clear it every month it shouldn't matter.

Of course, this only buys you a month... If you have an ongoing income shortfall you'll need to look at your incomings and outgoings in depth to tackle it.

I think I have been fooled this way. Made an urgent purchase on my card which has always and only been 5.9% for life transfer. 2 weeks later made a balance transfer to cover the purchase amount. The statement shows this, but now I see my original balance has been credited with the transfer whilst the purchase is accruing full interest. Maybe if I had waited til past my statement date a week later it would be different?