Santander Zero: Pay off cash withdrawal before purchases

Tarquinius

Hi,

Could anyone help explain how CC companies (specifically Santander Zero) allocate payments of partial balances?

I used my Zero CC abroad for BOTH a cash withdrawal AND purchases recently.

So on my return to the UK, I now want to pay off the value of the cash withdrawal (so I don't accrue further interest). For the purchases, I'd rather wait until my statement date to pay (as they're not currently accruing interest).

I just called Santander and they advised me clearly that I need to pay off the FULL CC BALANCE now, in order to avoid any further interest. (The first person I spoke to didn't know the answer, so the advice I received came from a manager there).

But I think that is not correct - as I thought the recent legislation is that CC companies must allocate any partial payments to the element of the balance that is accruing the highest interest rates (which in my case is the cash withdrawal?)

I'd be grateful for any advice on this. Are Santander correct, or am I?

Thank you

[Deleted User]

They are.

Payments will go the highest rate transactions already on your statement. Unstatemented transactions will not be paid until they appear.

eDicky

I don't have a Zero card, do cash withdrawals incur a higher interest rate?

Most credit cards take your payment to clear purchases that have already appeared on your statement before allocating it to cash withdrawals, lastly to any purchase since your previous statement.

Tandem is apparently unique in clearing cash withdrawals before your statemented purchases. They state this and have insisted to me that it is in fact the case, however I have not actually tested it - I use my Starling Bank debit card on the rare occasions I need to withdraw cash overseas, avoiding any inconvenience.

Tarquinius

Thank you for your replies - very helpful indeed. I may look at alternative options when I next go abroad.

zx81 - When you say "

Unstatemented transactions will not be paid until they appear

" - does this mean that interest will be added right up to my statement date, even if I pay off the full balance before my statement date?

Thank you

[Deleted User]

It means that unless you pay off your entire balance, unstatemented transactions will not be paid until they appear on your statement.

Interest is charged from posting date to when you clear it (unless the entire statement is paid in full, as well as the previous one).

Ben8282

Have you already paid your statement for the previous month in full?
If your previous statement was for £1000 you need to repay the entire £1000 before any payment will be applied to transactions which have not yet appeared on a statement.
When the previous statement has been paid in full, any further payments will be put towards transactions which have not yet appeared on a statement. Under normal circumstances such payments should be applied to the cash withdrawal before the purchases.
Interest on the cash withdrawal will be made from the date of the cash withdrawal until the date on which it is repaid.
Unless the cash withdrawal was for a very large amount, the amount of interest charged will not be excessive. You will be charged approximately £1.50 per £100 withdrawn per-month. So if you withdrew £500 two weeks ago and repay today, you will be charged about £3.75 interest. That's all.

redux

To be ultra-pedantic, maybe you don't necessarily have to pay the entire balance early to reduce interest.

Payments to the account go towards interest bearing items first, but only those that have already appeared on a statement.

This is why the bank's rather incompletely explained suggestion was pay the whole balance, so you cover first the last statement, then the more recent items.

However, you mention you've also done some spending abroad. Money coming to the account will clear the cash advance before these, due to interest on the cash.

Thus I think you'd stop interest if you make an early payment of an amount like the last statement plus the cash advance(s) plus maybe a quid or two, leaving the recent ordinary spending to appear on the next statement.

Personally I might not bother, I'd probably pay the last statement at the normal due date, and the cash advance with it the same day, wait to see the rest.