BEWARE! Don't get caught like me!

shaftingham

OK, 2 months ago I transferred 4.3k to my NatWest visa on a 14-month 0% deal. So, on March 8 statement date I owed this amount. Paid 300 quid off. No interest obviously. Between March 8 and April 8 statement, I made purchases of 1900 pounds on it.

Here's the issue:

After each purchase, made because it was necessary to use visa cards, I transferred the purchase amount across from my NatWest bank account to the card. So, Imagine my dismay when April 8's statement showed 18.54 interest! I rang NW immediately, and apparently ALL my payments (despite them being made online AFTER an equivalent purchase) have been taken off of my interest-free balance! I now apparently have a 1900 purchase balance and 2000 interest free balance.

I was told that ALL payments I made between Mar/April statement dates online pertain to the last statement's balance which was 4.3k interest free, DESPITE making purchase PRIOR to the dates of these payments. It's a no-lose for the card - issuer. It seems all purchases will conveniently be ignored until the NEXT statement, but payments made at the time of the purchases go back to the LAST statement (which only had the interest-free balance) and clear that.

So being good has landed me with an interest bill each month which will come to near 200 pounds by the time the 1900 is paid off! This cannot be right. In cannot be in the spirit of the FSA's instruction that expensive balances clear first.

The result is, being 'good' and paying my purchases off as I go via online banking has now left me with 1900 henceforth to pay interest on every month. I was told if I had waited until the April 8 statement, and paid the 1900 all at once, it would have cleared the 1900 interest-bearing purchases and NOT gone off of the interest free amount.

So for those of who like to keep 'on top' of things and pay cards off via online banking as you go, PLEASE AVOID THIS PITFALL. Wait until the statement date IF you have an interest-free portion of your balance.

I have lodged a complaint with Natwest, alleging this is not in the spirit of the 'most expensive first' system as regards payments, and that having run my card for years like this before my balance transfer, was never informed when I did it over the phone that my preference for running card payments would cause a significant part of my interest-free amount to be voided.

Any ideas or advice on where to go from here?

[Deleted User]

It's standard procedure across most, if not all cards, that payments are made against statemented items first, high to low interest.

And is in the t&cs, so I think you will get nowhere, apart from perhaps a goodwill gesture.

JELLYBELLY

This is standard every credit card I know works like this. When taking a new card ask questions about this or read the pre contact info very carefully.

FOREVER21

Sorry to hear of your experience and I realise that it will not help you but others may read this.When you take out a cc and transfer a balance at 0% you must not add any new spend to the card or you will as you have done, end up being charged interest.
This rule applies unless they state deal includes new purchases, which very few do.
This was raised recently on BBC moneybox programme, the advice given was to complain that this was not made clear at the application stage.
Might be worth a try.

grumbler

Deleted_User wrote: »

It's standard procedure across most, if not all cards, that payments are made against statemented items first, high to low interest.

How does this explain anything to the OP who complained that the payments were applied against 0% balance instead of purchases at higher interest?
I am not sure about statemented items though. Possibly the OP paid far too fast.

Deleted_User wrote: »

And is in the t&cs

http://www.natwest.com/downloads/personal/nw_sample_tscs.pdf
All I see in the T&C is:

6 Payments
(a) Payments to the account will not reduce the balance until the payment is cleared. Your statement includes information about clearance periods.
(b) We apply any payment to overdue amounts from previous statements before reducing the Minimum Payment. Balances will also be reduced according to their interest rates with the highest paid first. Payments in excess of the statement balance will be applied in the same way to reduce amounts charged to your account but not yet shown on any statement. If parts of the balance have the same interest rate, items on which interest is charged on
interest will reduce first.
(c) Where balances have the same special offer interest rate, they will be reduced according to their special offer expiry dates, with the earlier paid first.
(d) We may give notice allowing you not to make a Minimum Payment. If so, interest will still accrue.

JELLYBELLY wrote: »

This is standard every credit card I know works like this. When taking a new card ask questions about this or read the pre contact info very carefully.

Well, this is what MSE say abut this:

MSE wrote:

Credit cards let you do a number of different things such as spend, shift balances or withdraw cash. Banks must now put any repayments towards the most expensive debts first. This means spending on a balance transfer card isn't as bad it was before rules changed in 2011, but it can still cost you if you're not careful.
Spend on a 0% balance transfer card and any repayments will go towards the spending first. To avoid interest, you'll have to repay the full amount you spend each month. This could get complex, so if you need to make new purchases,

[Deleted User]

grumbler wrote: »

How does this explain anything to the OP who complained that the payments were made against 0% balance instead of purchases at higher interest?

Because those higher rate purchases were not statemented. He paid them off as he made each one.

dalesrider

shaftingham wrote: »

After each purchase, made because it was necessary to use visa cards, I transferred the purchase amount across from my NatWest bank account to the card.

I was told that ALL payments I made between Mar/April statement dates online pertain to the last statement's balance which was 4.3k interest free, DESPITE making purchase PRIOR to the dates of these payments.
Any ideas or advice on where to go from here?

NEVER make a payment till after the statement has been created. Otherwise any credits go towards the last months payments.

I never get why people get a credit card, make a purchase and then transfer funds from bank account to cover the payment....

Kinda defeats the whole object of a credit card and the INTEREST FREE PERIOD......

Might just as well have used your debit card :rotfl:

YorkshireBoy

grumbler wrote: »

Well, this is what MSE say abut this:

"MSE" is wrong (because it's taken a generalised view)!

I was aware Halifax treated payments this way, ie the same as NatWest as it now transpires.

MBNA, on the other hand, allocate any payments to the running balance, ie they make no dinstinction between statemented and unstatemented transactions.

I can quote you the relevant T&Cs if you'd like them? Or you can take my word.

YorkshireBoy

dalesrider wrote: »

NEVER make a payment till after the statement has been created. Otherwise any credits go towards the last months payments.

Are you reiterating what the OP already knows re his NatWest card?...or generalising?...because, as I said above, with MBNA (et al no doubt) it's not a problem.

Herbalus

dalesrider wrote: »

I never get why people get a credit card, make a purchase and then transfer funds from bank account to cover the payment....

Might just as well have used your debit card :rotfl:

Unless your card is Vanquis/Aqua/Capital One builder-type card and the credit limit is low. It frees up more space on your limit (This will only apply to a few people I know...).

terra_ferma

dalesrider wrote: »

NEVER make a payment till after the statement has been created. Otherwise any credits go towards the last months payments.

I never get why people get a credit card, make a purchase and then transfer funds from bank account to cover the payment....

Kinda defeats the whole object of a credit card and the INTEREST FREE PERIOD......

Might just as well have used your debit card :rotfl:

Great contribution your post. Reiterating what has already been said, making assumptions about OP's motivations, and then laughing at the them.