Help understanding 0% Purchases

Miss_Spendalot_2

Hey Guys

I have a Nationwide 17 Month Balance Transfer card that also has a 3 month 0% Purchase deal as well, the thing I need advice on is this.

I have Balance transferred £900 from an old Debt (credit) Card, If I were to purchase something on this card but pay it back within the 3 Month 0% period will I still be charged interest after that time ? or will I just be left with the 0% for the remaining 14 months left on the Balance transfer ?

I hope I have not made this question more difficult then it sounded in my head :-)

Thank you in advance...

parent_of_too_many

You'll just be left with the 14 months on the balance transfer.

YorkshireBoy

I would expect a small amount of residual interest each month until you clear the balance transfer.

parent_of_too_many

YorkshireBoy wrote: »

I would expect a small amount of residual interest each month until you clear the balance transfer.

This is not true. That is the whole point of 0%. If you clear your purchase within three months, it is 0% interest. Likewise with your balance transfer. You will not accrue interest on the balance transfer fee either.

I have done this numerous times.

YorkshireBoy

parent_of_too_many wrote: »

This is not true. That is the whole point of 0%. If you clear your purchase within three months, it is 0% interest. Likewise with your balance transfer. You will not accrue interest on the balance transfer fee either.

I have done this numerous times.

So specifically with the OP's card their payments go towards latter purchases before the earlier BT then do they?...even though both are at 0% for the first 3 months.

Because if they don't, ie they go towards the balance in transaction order, then the purchases won't be paid off by the time the 0% on purchases ends.

They will then be repaid first with the 4th statement onwards (highest interest rate), BUT because OP didn't settle the last statement in full the 'up to 56 days' interest is lost.

This means there will be some residual interest, and is why I said "expect some".

parent_of_too_many

Payments to the credit card are not allocated based on the timing of the original transaction. They are allocated by a payment order, in which a "purchase" comes before a "balance transfer". ALL payments made will go towards the purchase balance before the transfer balance. So as long as the OP covers the full purchase balance within the first 3 months, ONLY the transfer balance will be left, and NO interest will be paid.

I must add, the "payment order" is on transactions at the SAME interest rate, which in this situation IS the case. At different interest rates, the payments are allocated to the higher interest part of the balance first.

fredybs_2

Can I just quickly hijack this thread and ask the same question? Sorry if it sounds daft, but I don't want to be in some sticky situation later. I'm getting a Tesco CC with 15 months interest free on purchases, which I intend to use as soon as I received it. So, just with simple terms, can you please, explain how can I manage my interest free period.
As far as I understand it everything I spent with the first 15 months, I can repay in full at the end of the period without paying any interest(obviously I will be paying the min payment required)? Is this correct or there is a catch somewhere ?

thenudeone

parent_of_too_many wrote: »

Payments to the credit card ...... are allocated by a payment order, in which a "purchase" comes before a "balance transfer". ALL payments made will go towards the purchase balance before the transfer balance.

Not true at all.

If two balances are at 0% there is no obligation on the card issuer to pay one balancer off in preference to the other. They can do it either way, as long as it's in the terms and conditions.

For example Virgin card states:

We allocate your payment to amounts that are charged at higher interest rates before those that are charged at lower interest rates.
If we charge interest at the same rate on different parts of your balance, we will allocate your payment to the introductory rate first.
If two or more introductory rates are the same we will pay off the introductory rate with the earliest start date first.
If the introductory rates have the same start date then we will pay off that part which will be charged at the highest standard rate at the end of the introductory period.
We will then apply your payment to balance transfers, cash advances, money transfers and purchases, in that order.

http://uk.virginmoney.com/virgin/credit-cards-v3/popup/summary.jsp

If this were a virgin card then the payment would be used to reduce the "balance transfer" balance first, because balance transfers have a higher interest rate than purchases; and the purchase balance would remain unchanged, and would start being charged interest from the end of the 3 months.

I don't know what the Nationwide card does - the Op would need to check the terms.

In general, the safest way to proceed is to wait until the day after a promotional offer expires before paying off the balance. Then you can be 100% certain that the correct part of the balance will be reduced.

parent_of_too_many

fredybs wrote: »

Can I just quickly hijack this thread and ask the same question? Sorry if it sounds daft, but I don't want to be in some sticky situation later. I'm getting a Tesco CC with 15 months interest free on purchases, which I intend to use as soon as I received it. So, just with simple terms, can you please, explain how can I manage my interest free period.
As far as I understand it everything I spent with the first 15 months, I can repay in full at the end of the period without paying any interest(obviously I will be paying the min payment required)? Is this correct or there is a catch somewhere ?

That's basically correct yes. As long as you don't default, and as long as you CLEAR your purchases balance within that first 15 months, you will not pay any interest.

Miss_Spendalot_2

thenudeone wrote: »

In general, the safest way to proceed is to wait until the day after a promotional offer expires before paying off the balance. Then you can be 100% certain that the correct part of the balance will be reduced.

Oh I get it, so if I start paying money back before the end of the 3 month offer ends then that will/could be taken against the BTransfer debt and I will still have the same amount that I spent during the offer period to pay off at the end of the 0% term, whereas if I wait for the 3 months to end before paying it off it will go off against the one that will then be the highest interest rate (purchases) which will have risen to 15.9% is that right ?

parent_of_too_many

Miss_Spendalot wrote: »

Oh I get it, so if I start paying money back before the end of the 3 month offer ends then that will/could be taken against the BTransfer debt and I will still have the same amount that I spent during the offer period to pay off at the end of the 0% term, whereas if I wait for the 3 months to end before paying it off it will go off against the one that will then be the highest interest rate (purchases) which will have risen to 15.9% is that right ?

If it's a Virgin Card, yes, apparently.

What card is it? I'll check for you?