Why is 0% NOT 0%?

Billy_Blagg

I think - or perhaps that should be thought - I'm pretty clued up on saving money and have been 'tarting' for years - long before most people I know started to do it. I'm also not adverse to writing long letters till companies get bored and give me what I want to get rid of me or dragging in the odd Ombudsman along the way if the former doesn't work. And, yes! I know that you shouldn't put retail transactions on a 0% balance transfer card etc. But even so, I was surprised by the way that 0% isn't 0% on a dual transfer / retail transaction card.

To explain: I was given a 0% retail transaction promotion on 30th January 2007 on a card I didn't use that had a zero balance. I used it only for 0% transactions until later a second promotional rate was added for balance transfers on 1st May 2007. I transferred £5k in from another card and just carried on with my 0% retail and transfer.

In September 07, the promotional rate for the retail transactions finished so I paid off the balance using the money I'd saved leaving only the £5k that I'd transferred in as part of the balance transfer offer. I was pleased with myself as I even managed to get rid of the retail portion just a day before my statement was due. Imagine my shock then, I when I got my statement and looked at the small numbers to see that next month's estimated interest was 50 odd £.

I wrote to the credit card provider to ask them to explain this and I got the usual letter back explaining that 'we apply your payments to cash balances first (ie my £5k at 0%) before any retail balances - ok fair enough I understand that - 'Since you made your balance transfer, the payments you have made have been applied to this cash balance, while the retail balance remains on the account'.

Well, I have read this 20 times and I'm sure I understand it but I still come back to the same question; what does it matter? It doesn't matter if they take the payments of the £5k as the rest is 0% interest anyway so, although the retail portion is just sitting there with nothing taken off it, it is still not accruing any interest. Or is it? The banks implies it is but if both balances are 0% interest then where is the interest accruing? I've been given a sub-section of the terms and conditions to look at but, regardless, my head still keeps coming round to the question of why 0% x 0% isn't naught.

Can anyone explain this to me in terms that I can understand if I was a child? :mad:

King_Of_Fools

The retail purchases were only 0% for the period up to September (as you told us). All the money you have paid in has been coming off the balance transfer and not the purchases. Therefore, you are now paying your standard interest rate on the purchases you made during the 0% period but not yet paid off. The only way to stop paying interest now will be to completely clear the card of everything.

ukbondraider

Simply put..........

Do not buy anything on a credit card that has a balance transfer on it.

get a different card out for purchases otherwise as the last poster confirmed you will be paying interest

Lopo

Without stamping on toes...that was pretty dim...read the T & C's as it is all indicative there in print!

cm233lh

You played a trick on them by using their 0% introductory offer for your own ends - so they played a trick back by paying off your transfer and leaving your interest-bearing transactions outstanding. I think you're quits.

M_Thomson

Billy_Blagg wrote: »

I think - or perhaps that should be thought - I'm pretty clued up on saving money and have been 'tarting' for years - long before most people I know started to do it. I'm also not adverse to writing long letters till companies get bored and give me what I want to get rid of me or dragging in the odd Ombudsman along the way if the former doesn't work. And, yes! I know that you shouldn't put retail transactions on a 0% balance transfer card etc. But even so, I was surprised by the way that 0% isn't 0% on a dual transfer / retail transaction card.

To explain: I was given a 0% retail transaction promotion on 30th January 2007 on a card I didn't use that had a zero balance. I used it only for 0% transactions until later a second promotional rate was added for balance transfers on 1st May 2007. I transferred £5k in from another card and just carried on with my 0% retail and transfer.

In September 07, the promotional rate for the retail transactions finished so I paid off the balance using the money I'd saved leaving only the £5k that I'd transferred in as part of the balance transfer offer. I was pleased with myself as I even managed to get rid of the retail portion just a day before my statement was due. Imagine my shock then, I when I got my statement and looked at the small numbers to see that next month's estimated interest was 50 odd £.

I wrote to the credit card provider to ask them to explain this and I got the usual letter back explaining that 'we apply your payments to cash balances first (ie my £5k at 0%) before any retail balances - ok fair enough I understand that - 'Since you made your balance transfer, the payments you have made have been applied to this cash balance, while the retail balance remains on the account'.

Well, I have read this 20 times and I'm sure I understand it but I still come back to the same question; what does it matter? It doesn't matter if they take the payments of the £5k as the rest is 0% interest anyway so, although the retail portion is just sitting there with nothing taken off it, it is still not accruing any interest. Or is it? The banks implies it is but if both balances are 0% interest then where is the interest accruing? I've been given a sub-section of the terms and conditions to look at but, regardless, my head still keeps coming round to the question of why 0% x 0% isn't naught.

Can anyone explain this to me in terms that I can understand if I was a child? :mad:

You can't involve the Ombudsman in any complaint until you exhaust a banks complaints procedure. Even if it got that far, you wouldn't have a case.

Billy_Blagg

Hmmmm...dim? I didn't read the T&C's initially because I thought I understood the situation, as I said I'm not new to this. What I missed - and would never have got from the T&C's (I know I read them after I was directed back to them) is the very concept of what I've already described above. Interestingly, King of Fools reply is the only one who has actually answered my query rather than just restating what I already knew i.e don't do it again!

Billy_Blagg

I wasn't suggesting here that I contact the Ombudsman. I've been found bang to rights obviously. Patently I misunderstood the concept of what I was doing while I thought I understood it. As a note though, I did take this credit card company to the Ombudsman before for similar disagreements on the wording of the T&C's. The Ombudsman found in favour of the bank because of wording semantics that they admitted to me 'could be misconstrued' but which, by law, they had to abide by.