BT offer from HSBC - does this sound right?

grumbler

Simon7685 wrote: »

Maybe you do not see it but I would hazard a guess that many people do;
Any payments you make to your card will be applied to the parts of your balance incurring the highest interest first.
As you would have a BT on the card with a 0% rate the highest interest bearing amount would be any regular spending on the card.

Yes.

So it does make it sound as though if you cleared any monthly spending in full no interest would accrue on the account.

I have no idea how you come to this conclusion.
Can you explain this in more detail?

I am fully aware of the golden rules thanks very much and always follow them. I was merely curious of the wording in the offer I received, which I believe does lead you believe that you could run purchases alongside a BT without incurring interest if the purchases were paid in full each month.

If you are well aware, can you point to any (essential) difference between the 'wording' and MSE's explanation of the 'rule'?

MSE wrote:

...banks must put repayments towards the most expensive debt first. So spending on a balance transfer card isn't as bad as it was, as repayments first clear the spending, but it can still cost, as you only avoid interest if you pay off the FULL balance, including transfers and purchases.

HSBC wrote:

Interest on any purchases you make will continue to be charged at your standard purchase rate. Any payments you make to your card will be applied to the parts of your balance incurring the highest interest first.

Simon7685

Actually Yes, there is a fundamental difference between MSE and HSBC wording.
MSE wording states;
as you only avoid interest if you pay off the FULL balance, including transfers and purchases.

HSBC neglects to mention this in there wording and there lies the difference.

Interest on any purchases you make will continue to be charged at your standard purchase rate. - Simple and logical to understand for everyone.

Any payments you make to your card will be applied to the parts of your balance incurring the highest interest first. - Not so simple and logical for many people - "OK so any payment made will pay off the purchases made before the the BT. Great I've spent £50 this month so if I pay £50 it clears the purchases and no interest to pay"

It is all well and good saying that everyone should be aware that you need to clear the whole card balance to avoid interest but sadly a vast proportion of people do not always understand that in reality. You read it time and time again on this and other forums.

HSBC should make it crystal clear in their wording that to avoid interest on any purchases following a BT you must clear the whole card total. Their wording does not do this in the T&C's of the pamphlet they have sent containing the 0% offer. Most people would look at the offer they have received and take it at face value, they would not refer back to the T&C's of the card itself that they originally took out, which could have been years ago.

grumbler

Simon7685 wrote: »

Any payments you make to your card will be applied to the parts of your balance incurring the highest interest first. - Not so simple and logical for many people - "OK so any payment made will pay off the purchases made before the the BT. Great I've spent £50 this month so if I pay £50 it clears the purchases and no interest to pay"

Again, I don't see any logic behind this conclusion.

It is all well and good saying that everyone should be aware that you need to clear the whole card balance to avoid interest but sadly a vast proportion of people do not always understand that in reality.
You read it time and time again on this and other forums.

Well, are you saying that it would be more clear without any explanation from HSBC?
For some mysterious reason you find it misleading/confusing.
I find it helpful.

HSBC should make it crystal clear in their wording that to avoid interest on any purchases following a BT you must clear the whole card total.

In fact they don't have to do this as this is covered by the T&C.
However, they voluntarily explain this to make clear that you keep paying interest on purchases until you clear the purchases balance. This is a far more realistic scenario than "clear the whole card total" to avoid interest after transferring a balance.

Vortigern

Let's make it simple.

Purchases are not interest free.

Therefore you will pay interest on any purchase, from the date of purchase to the date you pay it off.

Mitvol35

But why is that?

robin58

Mitvol35 wrote: »

But why is that?

Because......

jamesd

Because the interest is only waived if the whole card balance is paid off each month. if it isn't you will pay the purchase rate of interest from the time of the transaction until you've paid off the amount used for purchases.

There's nothing wrong with spending on a card used for a 0% deal provided the effective interest rate is above the effective cost of any new balance transfer deal. so long as that is true it's sensible to spend the minimum payment to keep the 0% balance as high as possible, while paying interest only on the purchases. This is usually going to be a worse deal than getting a card with a new long term balance transfer rate, though, so it applies in cases where it's not sensible to apply for more credit.

[Deleted User]

Mitvol35 wrote: »

But why is that?

Because you're a no good, two bit, low life, dirty little homepage spammer.

Sorry - I mean, spam reported.

Simon7685

Response received from HSBC but still a mixed message? Paragraph 1 seems to say one thing but paragraph 5 something else, unless I am reading it wrong?

All purchases will be interest free as long as the full balance outstanding each month is cleared by the payment due date.

Interest is calculated on the daily outstanding balance, from the day the items were charged to your account until the day before your payment is received. The interest is then charged on a daily basis on the reduced balance, until the day your next statement is produced.

There is no interest free period for cash transactions and balance transfers (except 0% balance transfers). Interest on these transactions is charged on a daily basis from the day each transaction is debited.

If you pay the full balance on or before the due date, no interest is charged. If the minimum payment is credited to the account by the due date, interest will be applied. If the minimum payment is not credited by the payment due date, a late fee of GBP12.00 and interest will be charged.

For example, if you have a balance transfer and purchases on your card account, then the sum of all purchases transactions on your statement and also the minimum payment on your statement need to be paid to avoid interest charges.

In line with the terms and conditions of your account any payments received are applied to cash and balance transfers before any other transactions. This is because payments clear transactions with the highest interest rate first. How we allocate payments to your account is detailed on the back of your monthly statements. However, payments are applied to transactions in the following order:

- Insurance (Personal Protection Insurance)
- Interest on Cash
- Cash fees
- Interest on purchases and non promotional rate Balance Transfers
- Fees on purchases and non promotional rate Balance Transfers
- Purchases and non promotional rate Balance Transfers

- Interest on promotional rate Balance Transfers
- Fees on promotional rate Balance Transfers
- Promotional rate Balance Transfers
- Promotional rate purchases

I hope the above explanation clarifies.

grumbler

It's far more easy to read the T&C instead of asking to clarify something that is already absolutely clear. Incompetent idiots are not uncommon in all CS, and you can never be sure that you don't stumble upon one of them.
Later, when (not if) you get charged the interest, you can quote the idiot and demand a refund. Is it really worth the trouble?