Why am I being charged interest even though I'm paying off debt each month?

wiseguy2010

Hi,
I balance transferred £800 last year to my virgin cc as it was 0% interest until this december. I recently started to use the same card for purchases since I heard that any payments have to go towards the most expensive debts first rather than the other way round as it used to be. So eg, if I spent £200 on card purchases in one month my total balance would come to £1000 for that month. So when my statement comes I pay off the £200 as that is the only part of the debt which can be charged interest.

However, since I have been using the card for purchases and paying off just that portion of debt, I am still being charged interest. Is that right? The minimum payment is usually £25 each month. If I pay the £200 doesn't that count as more than the minimum payment? or should i be paying the extra £25 on top of that?

I tried calling virgin up for them to explain why i was being charged interest but the explanation i was given made no sense.

Can someone explain where i am going wrong?

rb10

Interest on purchases is charged from the day the transaction takes place, until the day it's paid off.

With nearly all cards, a concession is applied whereby no interest is due when the whole statement balance (and the previous statement balance) are paid off in full - clearly that doesn't apply here, since you are retaining a balance on the account.

So this interest covers the £200 of purchases from the date(s) of the transaction(s) until the date you've paid off those purchases.

scottishblondie

^^ this. You should keep separate card for spending and balance transfers to avoid the interest on your purchases.

wiseguy2010

ahh, i think i get it now. I've always been good with my cc spending and have always paid the full balance off each month so have never ever been charged interest. Thankfully, i was only charged a couple of pounds each time. Lesson learnt, will be using a separate card for any purchases from now on.

Thanks

Hazzinho

I always go for Barclaycard and Halifax they always seem to have combined purchased and BT at 0% for the duration of the promotional period which is usually at least 12 months.