Spending whilst on a 0% balance transfer

sumguy

Hello everyone....

I have 0% balance transfer with Barclaycard platinum which has been in place for maybe a year.... I need to use the £350 which remains on the card to take it to the full limit for a service on my car. Will this jepordise my 0% on the balance transfer ???

Thank you for your help.

mazy_m

Hi there,

Hope this helps....I recently transfered a big balance onto a Barclaycard. As my boyfriend had no money to buy his car tax put it onto the credit card.....I rang up to make sure this wouldn't affect it and was told that the Balance Transfer stays as a BT and the purchase as a purchase so it's seperate how it gets charged....so I think you have nothing to worry about! I'm no expert just reiterating what I was told a month ago!!

Maz

maginot

Your 0% won't be affected, but the £350 will be charged at normal interest.

It used to be that that any payments you made would only pay off the 0% debt and the interest debt would keep building. However this has changed and so when you make your monthly payments this will go to paying off the most expensive debt first e.g. The £350.

chattychappy

No problem, and indeed it can be quite an efficient use of credit. Even if you had another card, it could be better to put it on the Barclaycard if you're not able to pay this amount off promptly.

Lets say your limit is £10,000, your (promotional) balance £9,000 and your minimum repayment £400.

Normally your £400 repayment would come off the promotional balance.

Let's say you now spend £350 on the card. Because you are not clearing you balance in full, you will get purchase rate interest from the date of the transaction until payment arrives.

The next statement will show the transaction and interest and require a similar minimum repayment - say £400. This time when you make the repayment, it will be first used to wipe out your spend. The rest (around £50 here) will be applied to the promotional balance. Effectively you've taken a "payment holiday" on the promo balance.

So though you will pay purchase interest for a while (perhaps up to 56 days), after that you are effectively paying the promotional rate (0% in your case). Yes, technically the purchases have been paid off, but at the same time the promo balance is greater than it would have been.

56 days purchase interest is probably less than what may would pay on a BT fee.

This analysis works if the amount of purchases is less than the minimum repayment. If more, it still works to a lesser extent - but obviously fails if further purchases are made each month whereby the overall balance never decreases.

thenudeone

It's always much better to put purchases on another card and pay in full.
That way you NEVER pay ANY interest on either purchases or balance transfers

chattychappy

thenudeone wrote: »

It's always much better to put purchases on another card and pay in full.
That way you NEVER pay ANY interest on either purchases or balance transfers

Well.. yes, if you are clearing your purchase balance in full.

But if you have interest bearing debts elsewhere - eg if you are paying down other cards or have loans - then putting purchases onto the same card as your BT can be a more efficient use of your cashflow as it ensures you keep as much of your balance as possible at the promotional rate.