Interest free period - which balance is paid?

Mouse_Nightshirt

Hi.

I've just transferred to a new Tesco credit card. I had been stoozing with my old nationwide card and thus rather than choosing the Tesco card with the long interest free period on balance transfers and short on purchases, I went with the one with long interest free on purchases and short interest free on balance transfers.

However, shortly before getting the card I had an unexpected expense which meant I transferred five hundred pounds to the card.

My question is, if I now make purchases on this card, in the period where both transfers and and purchases are interest free, will the minimum payments go towards the balance that will start charging me interest sooner? Or will payments only go toward that balance when I start getting charged interest?

YorkshireBoy

Your question appears to be answered in the summary box (see allocation of payments, 3rd bullet).

ejc81

You need to check the terms & conditions of payments. You're payments should go towards the balance that attracts the highest rate but I trust no company on this and always read the small print

YorkshireBoy

ejc81 wrote: »

You're payments should go towards the balance that attracts the highest rate

That wasn't the question though. Both balances are at 0% (for around 9 months).

ejc81

YorkshireBoy wrote: »

That wasn't the question though. Both balances are at 0% (for around 9 months).

So see the 'allocation of payments' section in your T & C's!. Like I said above, standard should be payments go towards highest balance first, reality = they will screw you by whichever means possible

rb10

ejc81 wrote: »

reality = they will screw you by whichever means possible

How is Tesco's allocation of payments screwing you, in any way?

It appears to be the best outcome for the customer.

Mouse_Nightshirt

[STRIKE]I'm probably a bit dense in regards to this, if I can do an example, would it help?

For example, I transfer £200 and spend £500. The interest free period for transfers in 0% for 9 months. The period of interest free for purchases us 18 months.

In the first 9 months, 9 minimum payments of £25 are made to total £225. On the statement for month 10, will there be an interest charge of zero as the expensive balance has already been paid, or will contributions to that balance only begin when it begins to charge interest?

I'll dig out my T&Cs and have another look (I'm not sure I found a satisfactory explanation in there when I initially took out the card), I just thought I'd ask 9 months in advance of needing to know![/STRIKE]

Ah, found the line in the T&Cs. Really sorry guys and gals, and thanks for your help.

YorkshireBoy

There shouldn't be any interest on your 10th statement because no BT balance exists.

Did you read the link I provided in post #2?

Milarky

What about allocation of payments for the (occasional) product with identical balance transfer & purchases @0% periods? (This isn't such a product, of course)

YorkshireBoy

Milarky wrote: »

What about allocation of payments for the (occasional) product with identical balance transfer & purchases @0% periods? (This isn't such a product, of course)

Well Tesco also do such a product (12 months on both), and the summary box is the same as linked to above, which says...

This will normally be in the order of interest and fees followed by transaction type of cash advances, standard rate balance transfers, purchases and money transfers, special offer rates.

...which I read as...

Interest and fees
Cash advances
Standard rate balance transfers
Purchases and money transfers
Special offer rates

ie, with the exception of interest and fees, the above perfectly illustrates the requisite positive payment hierarchy.