Purchases during 0% balance transfer promotion

Emily1975

Hi - I have a Lloyds credit card which currently has around a £10k balance which is all at a 0% balance transfer promotion.

Normally I never spend on a credit card during a 0% balance transfer but Lloyds have contacted me to say that there is an attractive promotion during October whereby if I use the card on Android Pay I will get free travel on TfL (London buses and underground) and free coffee at Caffe Nero.

So I was just wondering, if I use it to make such purchases, how will interest be applied? I think it is as follows but would appreciate confirmation or corrections from others!

Monthly minimum payments will be directed towards highest interest items first. I'll be spending less than £100 so the minimum payment should more than cover the amount spent. However as I won't be clearing the entire balance I'll still incur interest between the date of transaction and when the minimum payment hits the account.

In order to avoid interest altogether would I be best to send manual payments to the card to cover each transaction immediately after I make them?

[Deleted User]

No. You need to wait for them to statement first.

chattychappy

Unfortunately with most cards, payments will be applied to statemented transactions before unstatemented transactions.

It seems Lloyds are typical: http://www.lloydsbank.com/credit_cards/terms_platinum.asp
6.1 We use any payments you make to pay off Transactions that appear on your statement starting with those on which we charge the highest rate of interest, and so on down to the lowest rate of interest. If the payment is not enough to pay off all Transactions at a particular interest rate, we will pay off Transactions charged at that interest rate in the following order:- Cash Withdrawals, Purchases, Balance Transfers and Cheques, followed by the charges in conditions 7.1, 7.2 and 7.3. If you pay more than the amount due shown on your statement, we will use any remaining payment to pay off Transactions that have not yet appeared on your statement in the same order as those that do appear on your statement.

So the best you can do is try to make your purchases just before a statement date and then pay immediately after statement generation.

If you have a DD then be sure to understand how it will interact with any manual payments - clearly you don't want to be paying down the promo balance faster than you need to. Consider cancelling it - but be sure to pay at least the minimum each month.

The situation you describe can be an example of how to extract better value out of your BT deal. By putting a few purchases through and paying them off just after the statement date, you effectively divert your minimum payment to purchases (which you would be making anyway) thus prolonging your 0% balance at a higher level. The cost could be trivial or even as much as 2% if you the timing wasn't so fortunate and you had a months' interest on a typical card. But this is still less than most BT fees. Of course the "value" you get for this declines as you near the end of your promo period.

Emily1975

Brilliantly comprehensive reply - thank you.

OK, on this basis I guess I make the transactions and then pay them off the moment the statement is generated. And consider cancelling the DD if it won't be reduced to take account of the manual payment. I will incur interest but it should be relatively trivial relative to the benefit of the promotion.

Emily1975

Actually - after all that it might be a red herring. According to this article I can use any mastercard! I have a Santander 123 credit card too which will give me 3% cashback on top of the freebie

http://www.standard.co.uk/news/london/android-pay-users-offered-free-travel-on-london-public-transport-in-october-a3356171.html