Paypal Credit - 24 month Payment Terms and 4 month no interest that isn't

[Deleted User]

OK, I know I have been stupid. But I want to stop others being stupid so writing this post.

I have a paypal credit account. One item I bought last month on 24 month payment terms, one item I bought on 4 month interest free payment terms (much more expensive) which is due the beginning of June.

I have been paying money in regularly to clear the larger 4 month interest free balance in four months. Unfortunately last month I bought something else, and applied for 24 month credit terms.

But paypal applies any payments first against interest incurring transactions. So I paid in enough today to clear the 4 month no interest free transaction, and its halved the 24 month payment terms transaction. I will now incur interest on the 4 month interest free transaction (which is ending 1st June). To stop this I would have to clear the supposed 24 month repayment transaction as well as the 4 month interest free transaction.

Their way of applying payments primarily against interest earning transactions mean there is no point in the four month interest free offer. Unless you can pay the interest earning transactions off as well before the 4 month interest free transaction falls due.

I thought 24 months meant 24 months. Oh well. My paypal credit account will be closed as soon as cleared. Fortunately, that won't take too long, even if some of the repayments will be for interest I didn't expect to have to pay.

steve900

Hi. Thanks for the heads up. I use this 4 months thing to spread the cost of holiday flights so will probably not use the 12 or 24 months offers in future as it seems a bit pointless. There is a forum thread about it over on Paypal.com but they were speaking about $ accounts so I got a bit confused by it all as the terminology seemed different to the £ account.

Takmon

It's best practice for credit providers to allocate payments first to balances with the highest interest rate. When they allocate them to the interest free balances first people complain that they are going against the customers best interests to make the most profit.

MSE articles and discussions on this forum will always say not to have an interest bearing balance and interest free offers on the same account.

What kind of interest rate do they offer on the 24 month plans? As far as i'm aware it's not very competitive in the first place so should really be avoided.

Ectophile

Credit providers have been strong-armed by the regulator into paying off the highest interest loans first. They used to be sneaky, paying off the interest-free ones first, leaving the customer paying the full rate of interest on loans that wasn't going down, even though customers were making all the payments on time.


I'm not entirely sure why the OP wants to go back to the bad old days.