MBNA Credit Card Interest Issue

namiku

Hi there,

I recently transferred a balance to my MBNA credit card to take advantage of their 14 month 0% offer.

I then used the card as normal for purchases as its a more rewards AMEX which gives you double points. Every month I cleared the purchase balance in full and left just the transfer balance on the card.

I noticed last month after looking at a statement and previous statements prior, that since the balance transfer I was being charged interest on the retail purchases despite this being cleared in full every month.

I phoned MBNA to speak to them about this and was told that in the T&C it states that I will be charged interest unless the balance of the card is paid in full and that includes the 0% balance transfer. That effectively means that I am being charged interest because of the 0% balance and its the same as being charged interest on that balance because the other balance is cleared in full.

I raised the point that I was being charged interest on a debt that didn't exist and that was wrong and that I was misled into thinking no interest would be paid on the balance transfer and although that is the actual case it is the reason I am being charged interest and effectively its the same as being charged interest for it.

This was at 08:30 in the morning and I could hear the customer service reps brain exploding as she heard all that so all she could say is that she would try and get a manager for me and raise this as a complaint. She wasn't able to and someone will be calling me back within 24 hours.

Surely this is not right? Does anyone have similar experiences?

[Deleted User]

It's absolutely right.

You're being charged interest on the purchases for the length of time you borrow that money for. Interest is waived only if you clear the entire balance in full month. You're not being charged any interest on the BT balance.

It's best to keep purchases separate from the BT card.

namiku

I have never ever read this on any BT guide, offer etc. It must be hidden deep within the T&C.

I find this very displeasing and quite frankly crooked. I would have never transferred the balance had I known this.

So, if I clear the purchase balance before the statement is produced monthly then there should be no interest to pay right?

[Deleted User]

No. You will be charged interest on a daily basis on the purchases, even if you only have them for a day, if you are not clearing the balance in full each month.

comeandgo

No the payments you are making will be coming off your transferred balance, your purchases are still wracking up interest. Stop spending on this card, it will cost you a fortune in interest on your purchases.

john1002

It is not crooked as it is clearly shown in the T&Cs and on every statement including the online ones also the guides I read including on here clearly state do not use a BT card for purchases for this very reason. The only way it would work is if the card had a purchase and BT rate the same. You need to find a new BT card and use this and then continue to use your MBNA for the rewards on purchases.

John

PeacefulWaters

Have you ever read "we won't charge you interest on purchases even if you have a balance transfer outstanding"?

Unless you have, it seems bonkers to assume a purchase will be interest free.

molerat

Another case of not carefully reading and fully understanding the T&Cs of the card I am afraid. This is the norm with the majority of cards and, as pointed out, paying off immediately will not make purchases interest free as payments normally only go against items that have appeared on statements. A few cards will deduct payments from cleared transactions that have not appeared on a statement but they are in the minority.

midnight_express

This is standard practice.

haggismn

I can't find any detailed t&cs from MBNA but I think they aren't necessary. The repayment allocation rule should apply here, ie any repayments should be applied to the highest interest debt first. These purchases are obviously charged at a greater rate than the BT's 0% so they need to be the first to be removed when a repayment occurs. This is specified by the UK cards association (of which MBNA are a member) and there is a PDF on their website explaining it. MBNA might try to argue that the balance transfer period is promotional and somehow is exempt from that rule but that would be very surprising. Assuming you are correct about origin of the charges, you should request refund of all the extra interest you have paid on purchases.

Let us know what happens.

[Deleted User]

There are no grounds to request a refund of the interest. It has been allocated correctly.