0% balance transfer and interest on purchases (Creation/IHG Mastercard)

fuzzy_y

Hello Money Saving Experts,

Just wondering if anyone else has experienced an issue I just came across (or perhaps my understanding of how balance transfers work is incorrect).

Managed to successfully obtain a credit card with Creation/IHG rewards which offered 0% balance transfers for 10 months. I transferred £3500 to that card and was aiming to make at least £350-400 payments per months for 10 months, then to just keep in for the IHG Gold Status it confers.

(Maybe a mistake) but made some purchases on the card in the first month c.£400. So after I received my first statement, I made a payment of £800 well in advance of payment due date, in order to fully cover the purchases and to pay off the BT, thinking there should not be interest levied especially as Creation's statements state that: Allocation of payments: We will allocate your payments to pay balances relating to higher Interest rates first. Where fees and charges are payable your payment will be allocated to the Interest rate applicable to these fees and charges, again relating to the higher Interest rate first.

I noticed in the second statement this month that interest was levied. When I queried this, they provided a calculation, which showed that payment was on time and cleared the purchases and more before the due date. But they pointed to a clause in the Terms which states "We will not charge interest on Standard Purchases shown on your Statement if you pay off the whole Outstanding Balance shown on that statement..." and their argument is that my payment has not cleared the whole outstanding balance (which obviously included the balance transfer amount...).

This seems to me counterintuitive especially if the payment was allocated to the balances with higher interest payments first? I am still contesting (and also ensuring not purchases make it on there!) but I wonder if it is my understanding that is flawed or Creation's?

Thoughts would be much appreciated.

Thanks,

Fuzzy

[Deleted User]

It's your understanding which is flawed.

Interest is only waived if you clear the entire balance in full, not just a sub balance.

Don't spend on a card with a BT balance.

Dobbibill

Ditto to what zx81 said above.

Combining BT and purchases can be tricky as you will incur interest on the purchases from the date of the transaction.

Do you have a different card you can use for future purchases?

fuzzy_y

Thanks zx81 and Dobbibill.

Dobbibill, yes I do have a different card to use. In doing research regarding balance transfers, I must have just missed the point about purchases incurring interest from date of transaction. In any case, I have cleared the purchases balance now and the IHG card will be left in a safe place!

Dobbibill

You may also have a small amount of interest payable on your next statement too so don't be alarmed if this appears.

fuzzy_y

Thanks Dobbibill, the next payment will definitely mop the residual interest up!