Beware Tesco Credit Card and their "offers"

splatt30

Tesco credit card is normally my everyday card. Spend everything on it and clear in full every month. Never pay interest. Currently have been using a couple of interest free on purchases cards so the Tesco card has been a bit redundant bar the monthly netflix payment.

So in November we bought a small chair from Tesco direct at £120.
"0% interest" until March on all purchases from tesco and tesco direct went the advert, let us help you out this Christmas. So I paid for the chair on the tesco credit card. Statement drawn up 3/12/17 showed netflix £7.99 and the sofa £120, with minimum payment of £10. So I pay £10 just before the due date, everything else was interest free until March, or so I thought.

Made a couple of purchases on the card in the sales last week (£550 of which about £400 is due to be refunded). Todays statement shows £1.48 interest. Long conversation with their call centre, it seems because the balance wasn't cleared in full (even though the remaining balance was interest free) I am being charged interest from date of purchase on the things I bought last week.

I've had numerous credit cards, I used to stooze extensively, I have managed strings of different offers of cards and never been caught like this. They are refunding the interest. I've cleared the bill in full tonight, (even though refunds are awaited because refunds don't count towards paying the bill in full apparently), and they have promised it will be straight forward to refund me when the balance goes positive with the pending refunds.

Think this card will be being cancelled after holding it for 14 years. The "offers" are clearly just a way of conning people.

[Deleted User]

This is standard - it's generally best not to mix 0% offers with standard purchases.

Given they've refunded the charges, it might be a card to hang onto. Most wouldn't.

kerri_gt

Had exactly the same with Barclaycard. Used a 0% offer on a balance transfer from another card, but this voided the 0% period you get on purchases each month unless you clear the entire balance including the BT. it's actually in the small print, and I assume will be with Tesco too. Took it ad a costly lesson and have just transferred the remaining balance to a different 0% card which I will not be spending on.

splatt30

I used to run a Virgin MBNA card which ran numerous and varying offers, it would have several balances with differing interest free dates, some transfers, some purchases, and you could play it. I have NEVER paid a penny of interest and have done offers like this before. Anyway, it is being refunded, it's more an irritation than anything else. I have lodged it as a formal complaint, perhaps when I phone next month to close it they will offer me interest free on all purchases for a period of time (now that would be worth keeping it for!!)

PeacefulWaters

You had a Teaco balance at 0%.

You had a non-Tesco balance subject to interest.

You didn't clear the combined balance in full. Therefore the non-Tesco transactions are subject to interest from the date of purchase.

splatt30

Payments are supposed to be made to the balance attracting the highest rate of interest. Therefore the £10 would have cleared the £7.99 non tesco balance leaving £118 at 0% interest. (plus I'm not sure £7.99 should attract £1.48 on interest)

Look I get how they have done it, I'm pleased they're refunding the interest (and next months trailing interest), I just want to bring it to people's attention, as, in my opinion, ultimately, it is a massive con.

Fingerbobs

splatt30 wrote: »

Payments are supposed to be made to the balance attracting the highest rate of interest. Therefore the £10 would have cleared the £7.99 non tesco balance leaving £118 at 0% interest.
.

It probably did, but because you didn't clear the statement balance IN FULL, the interest-free period on the £7.99 will not apply. Interest is payable on the £7.99 from the date of the transaction to the date you made the £10 payment.

bearcat16

This is standard.

The only card I'm aware of that does not do this is the Nationwide Select credit card.

redux

splatt30 wrote: »

Payments are supposed to be made to the balance attracting the highest rate of interest. Therefore the £10 would have cleared the £7.99 non tesco balance leaving £118 at 0% interest. (plus I'm not sure £7.99 should attract £1.48 on interest)

Look I get how they have done it, I'm pleased they're refunding the interest (and next months trailing interest), I just want to bring it to people's attention, as, in my opinion, ultimately, it is a massive con.

It's not a con at all.

Assuming the previous statement hasnt left trailing interest, if the non-Tesco balance hasn't yet appeared on a statement, they don't yet know whether you will clear the full balance or not, so interest isn't yet running; it's only added retrospectively at the statement date, not per day at a time before that.

I think a change of approach should be made when using such offers.

Consider someone with a standard account, always paying the statement amount in full just before the due date. Some spending is regular, like groceries or car fuel, but if there are items where there is a bit of discretion on purchase date, the ideal is to buy just after one statement date, wait for the next statement, then pay that, thus getting 50 or more days credit.

But if there is a zero per cent offer, with accompanying spending that won't be interest free, then ideally this timing should be shifted. Spend just before the statement date, and pay the interest-bearing part of the balance not long after the statement.

If the amount of spending will be fairly large, then use a separate card.

PeacefulWaters

"It's a con" = "I didn't bother trying to understand how this would work and made assumptions".

Dobbibill

This is standard, not a con. There are a few exceptions to the rule but generally the wording is....... you will have up to 50* days interst free grace period, if you pay your balance in full each month.

*days differ with different providers

You haven't paid your balance in full. Regardless of what rate the rest of your balance is at, the rule is if you pay your balance.

At least Tesco were kind enough to refund the interest from your error, that was good of them and now you are aware for the future.