Order of application of payments

faddy

Is the following true of all UK credit cards (it clearly is of some according to their T&Cs, others' T&Cs seem a little vaguer)? - a payment to the card is applied to statement balance(s) before being applied to transactions that haven't yet appeared on a statement, even if the statement balance(s) are at a lower interest rate than transactions that haven't appeared on a statement (e.g. when statement only shows a promotional 0% balance but non-promotional purchases have been made since).

msallen

As far as I know it is yes, but you would have to check individual T&Cs of the card in question to be sure.

MallyGirl

It is the usual way payments are applied but there may be some unusual T&Cs out there - you just need to be sure on how your own cards work

Terry_Towelling

The specific issue you raise has caught many people out.

Some people like to pay their cards off before they get a statement - that's fine if there is no balance being carried over and highly recommended if there is no 'carried balance' and the 'unstatemented' transactions are cash withdrawals. If there is a 'carried balance' it is almost certain that a card provider will only allocate payments towards 'unstatemented' transactions if the total payments received during that billing cycle completely clear the 'statemented' balance first.

Where you have a promotional balance (e.g. 0% balance transfer) and you also use the card for daily spending (at a higher %) there may be differences in the ways issuers operate. @Faddy gives the impression of someone wanting to do this but is worried about being charged interest on the daily spending.

I have asked Barclaycard the following question twice: If I carry a promotional balance (0%) and spend too (>0%) wait for my statement to arrive and then completely clear the 'spending' element (subject to also meeting the minimum payment amount) will I be charged interest?

They have said, no I won't, because they keep promotional balances and normal daily spending balances separate. I don't know if other issuers do the same and I've never tested it because I don't have any promotional offers and always pay in full anyway.

Like I say, though, I asked them this twice because I wasn't convinced by their first answer, so I have reasonable grounds to believe mixing a BT with daily spending is fine with Barclaycard - as long as you fully clear the daily spending after each statement and meet the minimum payment level at the same time.

MallyGirl

Not everyone operates like Barclaycard. That is why the general advice is to not mix ordinary (deal free) spending with promo offers (BT or MT).

Terry_Towelling

MallyGirl wrote: »

Not everyone operates like Barclaycard. That is why the general advice is to not mix ordinary (deal free) spending with promo offers (BT or MT).

Understood. That's why I mentioned doubts about other issuers in my post. Perhaps I should have emphasised this more