Order of payments - purchases vs balance transfers

mstans

Ok bit confused reading the small print of my latest Halifax credit card terms and conditions - I have quite a good deal 0% on new purchases for 14 months and 0% on balance transfers for 6 months - both of which i will use!!

I have written a letter asking them to confirm their policy - wondered if you guys had an opinion. I will of course let you know Halifax's response as soon as i get it:

heres a copy of my letter:

Dear Sir/Madam,
I wonder if you could help explain to me the order in which payments to my credit card are paid off my overall balance?
I have introductory interest rates on both new purchases (0% for 14 months) and balance transfers (0% for 6 months) both of which I intend to take full advantage of. Under the “Key Financial Information” you quite clearly state that you will use payments I make to first pay off the transactions with no interest charges, followed by those with the least amount of interest charges working upwards to those with the highest interest charge (Section 3.6).
My question is this... in the first 6 months I will be making regular payments. As both introductory rates are at 0% it is unclear as to what I am paying off (balance transfers or new purchases). Obviously you can see that at the end of the 6 month introductory offer, when money owing from balance transfers reverts to the standard rate of 14.94%, any payments made after this time will be paid off against the purchases (i.e. the transactions with no interest charges (0% for 14 months)) which will result with interest being accrued against the balance transfer.
I am obviously keen to avoid this and hence would like to know the answer to my question above which is:
“Are payments made in the first 6 months paid off against the new purchases or the balance transfer?”
I hope that made sense and I look forward to hearing your reply. The answer to this question will help me to better manage my money and hence ensure my Halifax Credit Card receives prompt and efficient payments.
Regards,
Matt

Clariman

Matt - if it is not spelled out more clearly than that in the Ts & Cs (I haven't read them), then you are asking a very valid question. You can be sure that their intention is that you will be paying interest on your purchases after 6 months, but whether or not that is fully supported by their Ts & Cs is another matter. To be honest, it would surprise me if their Ts & Cs did not cover that in some way.

Clariman

YorkshireBoy

Although it's not expressly stated in the T&C's, I suspect Halifax will say that they will apply payments in 'transaction order', ie the date they were applied to your account, with payments going towards the earliest transactions first. Indeed, other providers state this in their T&C's.

mstans

Many thanks for your replies so far - this could be interesting if they decide to do it by transaction order - as both the balance transfer and the purchase of a shiny new laptop were done on the same day (within a few hours)!!!

If I had thought about this before I would have applied for separate cards for balance transfers and purchases.

This is one way I'm sure credit card issuers are catching folk out and making more money out of their customers.

Matt

YorkshireBoy

mstans wrote: »

Many thanks for your replies so far - this could be interesting if they decide to do it by transaction order - as both the balance transfer and the purchase of a shiny new laptop were done on the same day (within a few hours)!!!

Since the laptop purchase may take (the usual) 3 days to appear on your account, I suspect the BT will beat it by two days.

If I had thought about this before I would have applied for separate cards for balance transfers and purchases.

In hindsight, you may have been better applying for their '0% on both purchases and BT's for 12 months' product. It's the same BT fee (at 3%), but the trade off is 3 months on the purchases for an extra 6 months on the BT.

Phantom_Flan_Flinger

This has been talked about many times and Halifax state in the allocations in their T&C's.

If you do not pay off your balance in full, we will allocate your payments to balances with a lower interest rate before balances with higher interest rates

If you still have an outstanding balance transfer after 6 months, all of your payment will go on to pay off the transfer. Your purchases will then start to accrue interest charges and will continue doing so until all of the balance transfer has been paid off.

This is standard across the whole industry except for Nationwide who allocate payments to the most expensive first.

mstans

Thanks Dave for your response,

just to clarify - I am clear that after the 6 months is up any payments I make will be made against the transaction with the lowest rate (for me this will be the purchases at 0% as the intro rate on the balance transfer has reverted to 14.94%).

What I am asking is which is paid off (purchases or BTs) when I am making payments in the first 6 months when both purchases and BTs are at 0%.
There is nothing to distinguish the two based on their terms and conditions as both have the same rate during this initial 6 months.

Matt

Moggles_2

As this card offers 0% on purchases for 14 months, it makes sense to use it for purchases. However favourable the BT offer appears, it only lasts 6 months.

Originally Posted by mstans
What I am asking is which is paid off (purchases or BTs) when I am making payments in the first 6 months when both purchases and BTs are at 0%.
There is nothing to distinguish the two based on their terms and conditions as both have the same rate during this initial 6 months.

You can bet that payments will be allocated to your transactions in a way that benefits Halifax.

This is one way I'm sure credit card issuers are catching folk out and making more money out of their customers.

Exactly. If you take up the balance transfer offer, there's every prospect that your 0% BT(s) will remain trapped on the card long after the BT promotion ends. This is the main way, IMO, the bank stands to make money and claws back the cost of the promotion.

It will be interesting to see what weasel words the Hally uses in reply to your letter

Milarky

It is just a thought, but as it doesn't seem to be stipulated anywhere in the credit agreement then (would you think?) the customer is entitled to stipulate this themselves? i.e. You would write* and say that

"Under condition 3.6 I wish my payments - where there are different transactions on which 0% interest is being charged at the time and the order of payments has not been further stipulated as to which is paid first - to be applied to any balance transfer first and then to purchases"

What can they say? "That's not in the agreement?"

It's worth a try maybe......

*obviously you have to make this request before any payments are made or they can allocate payments as they wish

mstans

Moggles wrote: »

As this card offers 0% on purchases for 14 months, it makes sense to use it for purchases. However favourable the BT offer appears, it only lasts 6 months.

Yes this was my initial intention as I have just got my Barclaycard Platinum for BT (0% 14 months) this was more of an after thought as my partner doesnt always get offered credit cards with good rates as they are self employed! Silly me should have thought about it a bit more

Moggles wrote: »

You can bet that payments will be allocated to your transactions in a way that benefits Halifax.

For sure ;-)

Moggles wrote: »

Exactly. If you take up the balance transfer offer, there's every prospect that your 0% BT(s) will remain trapped on the card long after the BT promotion ends. This is the main way, IMO, the bank stands to make money and claws back the cost of the promotion.

oh well i suppose this just means paying a BT fee of 2% and transferring the entire balance after 6 months!

Moggles wrote: »

It will be interesting to see what weasel words the Hally uses in reply to your letter

yeah cant wait for that!!