Very easy question (I think)

Late_To_Bed

I opened an account with Barclaycard about 15 months ago.

I took advantage of their 0% interest on balance transfers for 18 months for £2000 (my credit limit).

Around 3 months ago they raised my credit limit to £4000.

I immediately made another balance transfer, this time with 12 months interest free.

Now I am coming to the end of my first interest free period..

If I pay money to my account, which part of the debt will it reduce?

I know I should have found out before making the second transfer, but I didn't.

Thanks in advance for any help.

grumbler

It's not an easy question.
IMO the best way of doing this is to wait for the the first interest-free period to expire and the normal interest rate to kick in. After this all payments will go towards the balance with the normal interest.

dtaylor84

The alternative is to read the terms and conditions of the credit agreement you signed. It will have a section on the order of payments, and should explain how they deal with promotional rates.

Or phone and ask.

grumbler

The alternative?
Can you post an example from some T&C explaining allocation of payments for balances at promotion 0% with different expiry dates?

dtaylor84

Well, an example from my amazon card terms (although this was before the law changed to require paying off higher rates first):

2f. We will use your payments to pay off balances at lower interest rates before those at higher interest rates (this includes any transactions you have made between the date of your last statement and the date we actually receive your payment). We also pay off any promotional offer interest rates before any standard interest rates.
If you have two or more promotional offer interest rates on your account which are the same, we will pay them off in the following order:
- first we will pay off the balance at the promotional offer interest rate which expires first; then
- if two or more promotional offer interest rates expire at the same time, we will pay off the one which has the earliest start date; then
- if two or more promotional offer interest rates have the same expiry date, and start date, we will pay off the one with the lowest standard interest rate.
We will pay off any remaining balances in the following order:
- default charges and interest on default charges before other charges, fees and card purchases; then
- balance transfers, cheque transactions and money transfers; and finally
- cash transactions.

YorkshireBoy

grumbler wrote: »

The alternative?
Can you post an example from some T&C explaining allocation of payments for balances at promotion 0% with different expiry dates?

Not quite different "expiry" dates, but their different "start" dates would fit the OP's situation, were the card with MBNA, which is where this quote comes from (condition 4.2)...

if your account has two or more promotional rates which are the same:

we will first pay off the part of the balance that has the earliest promotional rate start date;

if the promotional rates have the same start date, we will then pay off the part which will be charged at the highest standard rate at the end of the promotional period.

I'd expect Barclaycard to similarly clarify things in their T&Cs?

dtaylor84

Actually, here's the current version of that condition:

2f. If any payment made to your account is not enough to pay off the total account balance in full on the date that payment is applied to your account, it will be allocated towards paying off those different parts of that total balance that are charged at higher interest rates before those that are charged at lower interest rates, regardless of whether items making up those balances have appeared on any statement. Paragraph 2g describes how your payment will be allocated if interest is charged at the same rate on different parts of that total balance.
2g. If interest is charged at the same rate on different parts of the total balance on your account (for example, two transaction types which accrue the same rate of interest), then your payment will be allocated as follows:
- If your account has a promotional offer interest rate and a standard interest rate which are the same, then, we will first pay that part of the balance which is charged interest at the promotional offer interest rate;
- if different parts of the balance have the same promotional offer interest rate, then we will first pay off that part which has the earliest promotional offer start date; if different parts of the balance have the same promotional offer interest rate and the same promotional offer start date, we will first pay off that with the highest standard interest rate;
- if different parts of the balance have the same standard interest rate, or if after having applied your payment as set out in paragraphs 2f and 2g there is still a balance on your account, we will apply your payment to the different parts in the following order: card purchases, balance transfers, cash transactions, money transfers and cheque transactions.

I'd expect Barclaycard to similarly clarify things in their T&Cs?

You'd hope so, but my aqua card says nothing about the situation of multiple promotional interest rates...

Late_To_Bed

Wow.

A great deal more complicated than I imagined!

Thanks for the replies.

I thought if I called them it would be highlighting the fact I am only using them for the interest free credit.

Their interest rate is high compared to some of the other credit I have, and once the interest free period is over, I'll either shut this account or leave it dormant.

grumbler

Well, if "the earliest start date" is really the case for Barclaycard, then for the OP the only correct way of paying is after 12 months expire.

chattychappy

grumbler wrote: »

It's not an easy question.
IMO the best way of doing this is to wait for the the first interest-free period to expire and the normal interest rate to kick in. After this all payments will go towards the balance with the normal interest.

Yep. If you pay just one day after the offer has expired, you only pay one day's interest - on my Barclaycard it would be 70p for each £1000 of balance.

iAMaLONDONER

Late_To_Bed wrote: »

Wow.

A great deal more complicated than I imagined!

Thanks for the replies.

I thought if I called them it would be highlighting the fact I am only using them for the interest free credit.

Their interest rate is high compared to some of the other credit I have, and once the interest free period is over, I'll either shut this account or leave it dormant.

So what did your payment count towards?