Warning: Post office Credit Card charging interest on fee!

ztxgpsman

All,

First post - be gentle.

Back in November I transferred a balance to my existing post office credit card 0% offer as my 0% offer on the previous card had run out. I paid a fee of course and it was reasonable and cost effective over the course of the 0% offer. A zero balance on the card prior to transfer.

Imagine my surprise when today I found out that the post office are charging interest on the fee I paid as if it were a purchase! I questioned this with them and they said it is their policy to treat the fee this way.

I've used 0% offers from time to time and the fee has always been fixed, a one off.. . BUT NO LONGER!

If you are thinking about a balance transfer, you need to factor in if the provider charges monthly interest on your transfer fee....certainly the Post Office does.

..I'm now off to find a new provider as I find this utterly bonkers and a bleepin cheek! (even though the interest charge is a small one)

Rgds all

ztxgpsman

grumbler

Calm down. It's a very small amount, isn't it? Just make a small payment to the CC. It has to go towards the fee and stop the interest being charged. Maybe the first minimum payment will do the job?

SammenForLivet2

Is this the account by Clydesdale Bank plc?

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I did a B/T to a Nationwide CC with a fee of around £20.00 - I was not charged interest on this fee; although I pay off far more than this every month.

I'm presuming the interest was; like; under £1 - would It not cost more too call them - than to just pay it off.

It does seem a bit of waste of time and effort (time is money) to apply for a new cc for the sake of a pound or two.

ztxgpsman

Please don't think I am new to 0% offers or to card swapping...I've done it many times and to me certainly charging interest on the fee is a new strategy, in fact I have looked back over statements from a long time ago, and I've never been charged interest on a fee previously.

You may think that interest on a balance transfer fee is fine, but I prefer to keep my own money...if I pay a fee than I pay the fee, not the fee plus interest...and interest will be charged on it for the time of the outstanding balance they say. So it's not really a 0% offer.

My post was to warn people that this is a new tactic and I noted the amount is small...but I'd prefer to keep my money to myself or be pre-warned that a fee is treated as a purchase, and not a fee!

Thanks

ztxgpsman

I find it odd that you find it ok when a provider doesn't notify you of a charge or potential charge, and you are happy to pay up no questions when they ask.

My point about changing cards is that i don't want to do business with companies who are not up front about fees/charges. If you know about something you can make informed decisions...I'd rather the interest charge be in my pocket than theirs.

Thanks

rb10

ztxgpsman wrote: »

if I pay a fee than I pay the fee, not the fee plus interest...and interest will be charged on it for the time of the outstanding balance they say.

The monthly payment that you make has to go first towards paying off the balance with the highest interest rate, before paying off amounts at lower rates.

So in your case, anything you pay off now will come off the BT fee (thus reducing the interest charged to zero going forward), and then once this has been paid off, you'll be paying off the balance transfer itself.

However, I agree that it should be made clear from the outset that the fee will be subject to interest.

jonesMUFCforever

To be fair most do say they will charge interest on the fee.
I always send a payment to cover this as soon as balance transfer is agreed.

YorkshireBoy

ztxgpsman wrote: »

Please don't think I am new to 0% offers

Must admit that was my first thought, because in my fairly extensive experience of 0% BTs charging interest on a fee is quite common. I will concede that many of them pre-notify (eg LTSB), but many also don't. However, in almost all cases it's quite possible to eliminate/significantly cut this interest by making a payment immediately the transaction is posted to your account.

I prefer to keep my own money...

That conflicts with what you're proposing to do then!

Your principles are going to cost you money, because having paid a 2.98% fee just 6-8 weeks ago you're now proposing to BT this debt on elsewhere...presumably for another circa 3% fee. And all this to avoid paying a few pennies interest!

There is one thing puzzling me though...this card also has 3 months 0% interest on purchases, so if you're saying they've treated the fee as a purchase why are they charging interest on it before the 3 months ends in February?

pb3

jonesMUFCforever wrote: »

To be fair most do say they will charge interest on the fee.
I always send a payment to cover this as soon as balance transfer is agreed.

I remember the bad old days where most CC companies changed thier T&Cs such that payments were allocated towards the balance with the lower or lowest interest rate.

In the case where some CC companies (Egg hint hint) charged interest on the fee, you were trapped into paying this interest over the life of the balance transfer. A nice little earner.

Now that the repayment allocation order has been reversed, I guess the CC companies can get away with this.

chattychappy

Yep it's peanuts these days.

If, say, your purchase rate is 2%/month, ie APR approx 26% and you make your first payment a month after the BT, then you will get interest of 2% on a 3% fee. Ie your fee becomes 3.06%. (This assumes that the first minimum payment covers the fee, which is pretty likely.)

I'm guessing it's a psychological thing. The OP is more comfortable paying money which is called a "fee" rather than money called "interest" as well as the surprise, of course.

Incidentally, I too have noticed that most T+Cs provide for interest being applied to the fee but they don't always do this. Perhaps it's because on, say, a £1000 BT and my figures above, the amount involved is 60p and it's not worth the hassle of dealing with complaints afterwards.

60p is hardly a great outcome for such an underhand strategy.