Don't understand the 0%

UptheReds_3

Hi
Can someone please explain how this 0% on balance transfers works in practice? I got 22 months at 0% with Nat West but am paying 1.35 a month in interest - is the transfer fee done this way ie spread over rather than a straight add on one off amount. I seem to be being robbed!

[Deleted User]

It's not the fee being split over months. If you're paying interest, I suspect you're putting purchases on it as well. Or have broken the terms and are no longer on the 0%.

CRISPIANNE3

UptheReds wrote: »

Hi
Can someone please explain how this 0% on balance transfers works in practice? I got 22 months at 0% with Nat West but am paying 1.35 a month in interest - is the transfer fee done this way ie spread over rather than a straight add on one off amount. I seem to be being robbed!

I had a balance transfer in operation to my Lloyds credit card and I noticed that the fee was attracting interest per month. However I have never experienced this with any other credit card provider.

gglaze

Generally the fee for a BT promotional offer is going to be added to the balance at the same rate as the rest of the BT. Although I suppose it's possible this could not be the case with some cards, but I've never heard of that.

More likely you've done something to get some interest accruing at your normal purchases rate on a separate balance, such as making some purchases on the same card (even if you have paid them off after). Check your statements, look for anything about a summary of "balance £X at interest rate R%", sometimes the statement will give you the exact breakdown at the end of the month, so you can see what balance your interest is coming from, and at what rate. If your statement doesn't have this, maybe give them a call - they surely will have that info in the system somewhere.

sfax

Even if you're paying interest on the fee, it will normally be paid off in 1-3 months as it represents 3% of the balance and minimum payments are generally 1-3%. The fee will paid down first as it yields more interest than the 0% BT itself.

If you'd broken the terms, you'd be paying a lot more than £1.35/month in interest unless you didn't transfer much

As others have said, it could also be purchases. It's better not to use it for purchases at all

zerog

sfax wrote: »

Even if you're paying interest on the fee, it will normally be paid off in 1-3 months as it represents 3% of the balance and minimum payments are generally 1-3%. The fee will paid down first as it yields more interest than the 0% BT itself.

If you'd broken the terms, you'd be paying a lot more than £1.35/month in interest unless you didn't transfer much

As others have said, it could also be purchases. It's better not to use it for purchases at all

My wife has a lloyds card and there was no interest charged on the BT fee.

I have also just applied for one 10 minutes ago (for the 1.5% BT fee and £25 cashback from moneyexpert) so will report back if they make me pay interest on the fee.

sfax

zerog wrote: »

My wife has a lloyds card and there was no interest charged on the BT fee.

I have also just applied for one 10 minutes ago (for the 1.5% BT fee and £25 cashback from moneyexpert) so will report back if they make me pay interest on the fee.

It's a bit cheeky but even if they do, it's a negligible amount. E.g. £5,000 BT, 3% handling fee, £150 => £2.30 interest at 20% APR for month 1, min payment of 2% is £100 leaving a fee of £50 outstanding for month 2 => another £0.77 and then it's paid so about £3 interest on the fee in total.

For 1.5% handling fee, it's about £1.20 interest in total using the same example