Balance transfer card with 6 months 0% purchases

Abcynthia

Hi there,

I just need someone to clarify I have this correct as the last time I looked into it the rules were different i.e before the changes came in.

I am aware they made changes to how payments are applied to credit cards now. I've read and read, but want to be absolutely sure I understand this correctly as it's not something I want to do trial and error with!

For example: I have a credit card with 0% on BT for 24 months and 0% purchases for 6 months. I put in a balance transfer of £1000 and make a purchase of £50. As long as I've paid at least £50 towards the card (which of course I will due to needing to make minimum payments/wanting to pay the BT off) in the first 6 months I will not pay any interest on the purchase and it will not affect my BT?

I just remember the purchase used to get trapped under the BT and all your payments would go towards the BT before the purchase, so your promo rate would end and you ended up with a lot of interest being whacked on.

Thank you in advance for reading.

grumbler

Abcynthia wrote: »

For example: I have a credit card with 0% on BT for 24 months and 0% purchases for 6 months. I put in a balance transfer of £1000 and make a purchase of £50. As long as I've paid at least £50 towards the card (which of course I will due to needing to make minimum payments/wanting to pay the BT off) in the first 6 months I will not pay any interest on the purchase and it will not affect my BT?

Correct.

I just remember the purchase used to get trapped under the BT and all your payments would go towards the BT before the purchase, so your promo rate would end and you ended up with a lot of interest being whacked on.

AFAIK, not all CCs make it clear how the payments are allocated if you have several 0% balances with different expiry dates.

However, even if the payments you make during the first 6 months don't go to the purchases balance (most likely they do), all payments made after 0% on purchases expires certainly pay the the purchases balance off in the first place.

Abcynthia

Thank you so much grumbler - your help is very much appreciated

InsideInsurance

You need to check the terms on allocation of payments.

Looking at Tesco Bank they state that if you have multiple promotional rates then payments go towards the rate that ends first and so you would be fine. Barclaycard on the other hand doesnt clarify that point and so there may be a danger of having to pay one months interest and then trailing interest if they arent doing the same.

grumbler

InsideInsurance wrote: »

...so there may be a danger of having to pay one months interest and then trailing interest if they arent doing the same.

How come?
During the first 6 months it has to became clear how the payments are allocated.
In the worst case scenario just pay the purchases balance off the fust day after 0% ends, and there will be no any interest.

InsideInsurance

grumbler wrote: »

How come?
During the first 6 months it has to became clear how the payments are allocated.
In the worst case scenario just pay the purchases balance off the fust day after 0% ends, and there will be no any interest.

If no payment has come off the purchases because its all gone to the BT then you could pay off the purchase balance once the 0% has ended but given statements vary on the date they're produced, that payments normally take time to clear/be processed etc and you are probably looking at a few days interest rather than none.

Depends what the os balance is on how material it is but it technically is still interest that has to be paid with a similar issue for the following month on trailing interest.

Assuming the OP doesnt have a giant credit limit the monies are likely to be low as long as they do pay it off as quickly as is possible but its unlikely to be nil and even if its 1p it still means they've paid interest.

I have no idea if any creditcard companies would put all payments in this type of scenario to the promotional rate with the longest duration so this is all highly hypothetical

grumbler

InsideInsurance wrote: »

If no payment has come off the purchases because its all gone to the BT then you could pay off the purchase balance once the 0% has ended but given statements vary on the date they're produced, that payments normally take time to clear/be processed etc and you are probably looking at a few days interest rather than none.

Possibly, but surely not "one months interest and then trailing interest" like you said.
Based on my experience FPs usually clear the same day.

Depends what the os balance is on how material it is but it technically is still interest that has to be paid with a similar issue for the following month on trailing interest.

Just pay a little more than the purchases balance and there will be no trailing interest.