Balance Transfer / New Purchases Payment

spike87

Hi,

We did a balance transfer in January for around £1500 and moved it to Virgin Money. They were offering 0% on all balance transfers until Apr 13 and 0% on purchases until June 12.

Between January and June we have made a few purchases on the card totalling around £1000. We have also been making payments (thinking that the payments were going towards clearing the new purchases, which we now know were not).

Basically we are able to clear the £1000 with no problem but do we have to clear the balance transfer first? If we were to wait until 21st June when our rate goes up for new purchases, could we make the payment then and clear that off as the rate would be higher than balance transfers which has the promotional rate at 0% until Apr 13?

Many thanks!

CLAPTON

why do you say the payments aren't going towards the purchases?

DavidDebt

VirginMoney gives you a very detailed statement which indicates outstanding balances separately in the following categories.

Purchases/Balance Transfers/Cash Advances and 1 other.

CC companies are required to clear the most expensive debt first (highest interest rate)

As you are currently in 0% period for both balances. So a bit of a gray area! I'd suggest you read you T&Cs in detail. If it was me I'd have assumed that they would have paid towards the balance which has the highest follow on rate. Check your monthly rate for balance transfers is this higher than for purchases? If so that may explain why this has happened. But again check your T&Cs.

Cheers,

David

spike87

Yes the monthly rate for balance transfers is slightly higher than new purchases so I can see why this has happened. However when the new purchases rate goes from 0% to 1.23% on 21st June, will payments then go towards this as the balance transfer rate will remain at 0%? Or do they still maintain that payments go towards the highest interest rate excluding promotional rates?

Or would it be possible to call them and request to pay off all the new purchases rather than it going towards the balance transfer amount?

DavidDebt

When your promotional rate on purchases ends your monthly payments will clear the purchases balance off. If you still have a purchases balance and balance transfer balance when your BT promotional rate ends then your payments will go to BT balance first.

I love the transparency that virginmoney give you on their statements. I dont know of any other CC provider that offers this.

Cheers,

David

DavidDebt

To clarify any payments made to any statement where the statement date after 21st June will go towards your purchase balance first.

spike87

Thank you very much!

pipkins17

Just a quick question....I've recently spent about £500 on purchases on my current credit card which has long gone past its 0% offer so I was considering applying for another 0% transfer....prior to me doing this, I was wondering, if I used my current credit card to withdraw cash out, say £1000 as an example, and then transferred the balance to a new 0% card, would I still get charged by the new card provider to pay off the cash advance first??? Hope this makes sense, its my first time on here....:D

bouncydog1

The new provider won't differentiate - they will give you the whole balance at 0%. However do be aware that you will be charged a huge interest rate on cash advance and even after you do the balance transfer you will likely be sent a statement showing interest payable by the current provider the month after the balance transfer.

If you need to draw cash on your credit card, this would suggest you need help with your finances - suggest a post over on debt free board might help you and you may not have to withdraw the cash!

brucele

Hmm, not very bad

thenudeone

spike87 wrote: »

Or do they still maintain that payments go towards the highest interest rate excluding promotional rates?

Payments will be allocated based on the current interest rates.

eg: if you have purchases @ 26.8% and BT at 0% promotion, payments will go to the purchase balance first.

Once the promotion ends, the next payment will go to whichever is the highest rate at that time.

If you have multiple balances. you must be VERY CAREFUL not to pay off a 0% balance before it ends. If you do, then using the approved rules, the payment will not be allocated to the (soon-to-expire) offer, but to the other balances which (at that moment) have a higher rate. The 0% balance will remain untouched and, a few days later when the offer expires, it will start being charged the standard rate. The best thing to do is wait until 1 day after the 0% promotion ends before paying it off. The you can be sure it will be applied to the "correct" balance.