Balance transfer v's 0% on payment, which pays first

sigsoldboy

Can anyone here advise. I transferred a balance from my Nationwide Credit Card to my Halifax credit card as they were advertising 0% interest for 9mths on Balance transfers, this was about £1400.

Just after the transfer Halifax were advertising 3mths 0% interest on purchases. I purchase a course for £1289, which I payed back 2mths later.

I've just checked my statements and I've been paying interest for the last couple of months. Halifax have told me that the Purchase I paid off was actually the Balance transfer and now the 3mths Interest free period has expired so I must pay interest on the purchase at the usual rate of 24%.

Can Halifax do this?

thenudeone

Yes. they can. mbna do exactly the same.

When there are balances at different rates, card issuers must use payments to pay off the highest rate first.
But when different balances are at the same rate (0% in this case) they do not have to apply the balance where the offer ends first (which is what would benefit customers). In your case they have applied it to the offer which ends later, but as long as the Ts and Cs allow that, they can do it.

In cases like this, you should wait until 1 day after the first offer ends, then pay off the balance. You can be sure that the payment will go against the purchases although you might pay a few days interest until the payment clears.

sigsoldboy

Cheers, hindsight is great and will bear this in mind in the future.

The T&C's stated

"If the payment is not enough to pay off all transactions at a particular interest rate, we will pay off transactions charged at that interest rate in the order:- cash advances, cheques, purchases, balance transfers and default sums."

Halifax have told me they changed the T&C's and so will look at the dates to which T&C's applied.

I'm thinking of reporting this to the FO, I never asked Halifax for the 0% offer, they applied it to my account and as a result I have been penalised. By bringing in a new offer it overrode the old offer and as such is as good as a con, Halifax bulked at this and have said they do not or would not penalise customers in this way, but they are. Have to call back this evening to talk it through but has anybody else had any luck with this? They only way you can stop this happening is if you pay the whole balance off, how can a lender do this. I would say this is certainly not in the spirit of the law to offer a 9mth 0% Interest offer, then apply a 3mth offer which unless you pay the whole balance off would always place the customer at a disadvantage.

sam2009_2

I have this probem with MBNA. I did 0% balance transfer on it first then used it to on retail purchases. When I did the balance transfer the customer service assistant told me that the highest interest balance would be paid off first. But it is not the case and they have been charging me daily interst on my retail purchases.

mr_mitch

thats terrible really.

when I read that the repayments will come off balances with the highest interes... I'd expect exactly that to happen.

I expect the same thing will happen with me on my nationwide card then! great! lol

thenudeone

sam2009 - The assistant is right, and this is exactly what is happening. The highest interest rate balance is being paid off first.

In your case you will still be charged interest on any purchases you make from the date of the purchase transaction until that balance is paid off.
There is no interest free period on purchases unless you pay off the full statement balance (not just the purchases) and did so in the previous month as well. In all other cases you will be charged interest on purchases. This will be in your terms and conditions.

So unless you pay off the purchases immediately they are charged your account (which is impossible due to delays in processing transactions and payments; and also pointless because that defeats the object of a credit card), you will always be charged interest.

The old MSE golden rule "never use a 0% balance transfer card for purchases" is still important, although somewhat less so since the repayment order was changed recently.

Best to put purchases on a different card, then use the mbna 0% BT offer to clear that card's balance in full well before the due date. Then there will be no interest charged on those purchases on either card (although there will be a BT fee to pay).

sigsoldboy

Hi Nudeone,

can you advise on the details on the back of the Halifax statement:

"If the payment is not enough to pay off all transactions at a particular interest rate, we will pay off transactions charged at that interest rate in the order:- cash advances, cheques, purchases, balance transfers and default sums."

They in this instance have paid of the Balance transfer prior to the Purchase. Halifax keep promising to call back but never do....