Allocation of Payments.

Hardly_Rich

Hi. I'm hoping someone could help. I can't quite find the exact answer..
I have a credit card which I transferred a balance to. The 0% promo rate ends in 2018.
I've been offered a balance transfer on the same card but with a 0% promo rate that ends 2017.
Let's say (to make it easier to explain) that I transfer £100 onto the card using the promo rate that ends 2017.
If I paid £50 each month I'll have paid the £100 off. Once paid off would the outstanding balance remain on 0% til 2018??
I guess I'm asking how my payments are allocated towards the debt.
Thanks.

grumbler

Most likely the debt with the closest 0% expiry date gets paid off first.
However, the only way to know this for sure is to check the T&C. If they keep silence, ask the CS, but don't expect this information to be 100% reliable unless you get it in writing.

molerat

You need to read your T&Cs. MBNA apply payments to the earliest promo start date.

cos_2

Wow, molerat. I got a new MBNA card today and had the Ts and Cs right beside me. I was about to post precisely the same thing. You just beat me to it

Hardly_Rich

Thanks for the quick response. I'll try dig the T&Cs out. If I'm reading your response correctly my payments won't start coming off the new BT (let's say the £100) until I've paid off all the initial BT off. ?
I thought I'd read somewhere that the provider had to allocate the payments towards the most costly debt first? In my case both BTs are not costly (0%) just that one will start to be costly when that promo period ends.

molerat

Different providers may allocate differently. Santander and CapOne simply state they allocate to highest interest bearing balance.

grumbler

Hardly_Rich wrote: »

...
I thought I'd read somewhere that the provider had to allocate the payments towards the most costly debt first?

Yes, but two 0% debts with different expiry dates are equally costly.

In my case both BTs are not costly (0%) just that one will start to be costly when that promo period ends.

Yes, after some 0% ends, the payments definitely go towards the balance that isn't 0%.

Hardly_Rich

Grumbled I'm not too sure what you mean.
What I don't want to happen is loose my 2yrs 0% rate. I've probably confused myself. In clearing the latter bt first I won't loose out on the 0% that the initial bt would have for the final 12 months.

grumbler

Let's assume you have two 0% balances:
'A' ending in 1 year.
'B' ending in 2 years.

When you make any payments you obviously want them to reduce 'A' in the first place, not 'B'.
However, it's not always the case (depends on the CC and, possibly, the start dates of 'A' and 'B') and will definitely be the case for any CC only after a year when 'A' switches to a standard rate while 'B' remains at 0%.

Hardly_Rich

Thanks for the advice..
If I'm reading it right it sounds like it may cause my long term 0% transfer rate some issues. Not worth taking the offer of a shorter term transfer just for £300ish.

hamish05064

Do u have any financial advisor or Charatered accountant for that? They would give u best advice for that