Is there a way around my error?

newgirlhere99

Hope its ok to call on the expertise here.

I have a halifax one card, 0% until May 2012.

I had a balance in August of £6500, with a limit of £9k. I purchased a new car and due to funds being tied up in savings, I paid the balance of £2400 using this card on 19th August. I then made a payment of £4250 on 7th Sept, the day before my statement was produced. For August there was an interest charge of about £18. Im horrified now to be told by the Halifax that the payment I made on 7th Sept was allocated to my 0% balance and the the £2400 will continue to be charged with interest.
I assumed that the payment would be allocated to the purchase I made. Apparently if I had made the payment after the statement date of 8th Sept, this would have been the case.

Can I have your expert comments please?

opinions4u

Are you saying you had a 0% balance transfer card and made a purchase on it?

newgirlhere99

I did yes, knowing that I would be making a payment against the purchase and that payments are generally allocated towards the highest interest first. Halifax are saying that the payment was allocated to the 0% balance as I made the payment in the same month as the purchase.

molerat

The only way will be to contact them and appeal to their better nature saying what you intended to happen and that in the normal course of circumstances the payment would have been allocated to the purchase. You have now found out why it is rarely a good idea to pay before the statement date.

CLAPTON

probably not; it would be normal for any payment to be allocated to the 'existing' statement balance just as any purchase is allocated to the next statement cycle;
although the new payment hierarchy has changed the rules a bit, it's still the case that one should never use a 0% BT CC to make purchases unless your really really understand the T&Cs really well

to reduce interest you need to pay 2,400 as soon as you can.

chattychappy

This is common but not universal practice. I would double check the T+Cs to ensure that they do say payments will be allocated this way - ie to statemented balances first.

Assuming they do, all you can do is ask them nicely... but even if they refund the interest, until you make another payment to cover this interest will continue. So what you really want is for them to re-allocate the payment.

If you get no joy, you can follow up with a written complaint, to the FOS if necessary. I don't have time to check the wording right now, but I do believe this arrangement goes against the spirit of the Lending Code/OFT policy that payments should be applied to the highest balance first. Also - even if the rue is "clear" in the small print but not in their key facts summary/other promo stuff, then you have a case.

Do feed back the outcome!

newgirlhere99

This is the extract of the T&C

2.2 We use any payments you make to pay off transactions that appear on your statements starting with those on which we charge interest at the highest rate. We will then pay off transactions on which we charge interest at the next highest rate and so on down to the lowest rate of interest. 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. If you pay more than the amount due shown on your statement, we will use any remaining payment to pay off transactions that have not yet appeared on your statement in the same order as those that do appear on your statement. In this condition, "transaction" includes the amount of the purchase, cash advance, cheque, default sum or balance transfer plus any interest, fees or insurance payment charged as a result of that transaction. For example, a cash advance fee is included as part of a cash transaction.

I called Halifax and they are adamant the payment was allocated correctly. The purchase and payment appeared on the same statement.

pqrdef

The positive order of payments is a matter of law, and clearly the bank's lawyers have searched the law very carefully for loopholes. But the way they've written their T&C is obviously capable of being grossly and gratuitously unfair, since your "mistake" is neither here nor there, but looks set to cost you a lot of money. Therefore, it isn't necessarily legally enforceable. It might fall foul of the Unfair Contract Terms Act.

I think I'd put in a formal complaint. Just focus on the fact that their interest charges would be much lower if you hadn't made that payment early (!), use the word unfair a lot, and mention that if necessary you'll take it up with the Ombudsman.

chanz4

"appear on your statements starting with those on which we charge interest at the highest rate" , if it was paid before the statement this would cover them.

opinions4u

pqrdef wrote: »

The positive order of payments is a matter of law

Which law is that? My understanding is that it's a matter of regulation, not legislation.

and clearly the bank's lawyers have searched the law very carefully for loopholes.

I suspect not. Statement issued. Payment allocated against amounts on that statement. The purchase appears on the subsequent statement. It's not sharp practice and I doubt it's been done to deliberately catch people out.

Remember, the OP hadn't even been billed for the money when the repayment was made, so it makes complete sense to allocate the payment to the statement most recently issued.

It might fall foul of the Unfair Contract Terms Act.

Possibly. Not certainly.

I think I'd put in a formal complaint. Just focus on the fact that their interest charges would be much lower if you hadn't made that payment early (!), use the word unfair a lot, and mention that if necessary you'll take it up with the Ombudsman.

I think this approach will get the interest charge refunded.

suehippo

I think you may have to put this one down to experience as you paid before the statement I think they have acted within their t&c's. Had you waited for the statement and then paid you wouldn't have had this problem.

I personally can't see that appealing to their better nature (banks don't have one) will work.