Confused with billing cycle

Jello123

Hi

I have used credit cards in the past when they had 0% interest free purchase periods. But I always paid off the balance months before the promotion period ends. So I have never encountered or worried about interest being charged.

At the moment, I have a MBNA card with £1000 balance which was a money transfer. It’s 0% for another 20+ months.

I have been making purchase last few months with the aim of clearing the balance before being charged interest. But my last statement had interest charged. So I am obviously doing something wrong!

My statement on 23 May said I had £1000 money transfer balance at 0% for another 20 months. It also said I had £500 worth of purchase at 1.445%. Which it charged me interest for. Some of these may have been from the previous month. Payment due on 17th June.

I made a payment the next day on the 24th May of £550 thinking it would clear the debt on my purchases. My regular DD is still scheduled to go out on 17th June which I assumed will be used towards the money transfer debt as the purchase debt is already paid off. Is this correct?

On 28th May i made a purchase of £250 on my credit card for a holiday deposit (I wanted the credit card protection).

When should I pay the £250 off on order to not be charged interest? Do I pay it now? Or should I wait for my June statement and pay it off then?

[Deleted User]

If you don't clear the entire balance in full, you'll always be charged interest, which is why you're not able to avoid the interest on purchases.

Your payments will go the highest rate STATEMENTED balance. So you need to bear that in mind when making interim payments.

BoGoF

For good reason the general advice is don't mix spending and transfers on a balance transfer card.

Sncjw

You are paying interest on the purchases to are making. The 0% interest is for the amount you used for money transfer.

18cc

There are two important dates on a credit card the statement date and the payment date.

When your statements arrives you will see how much the statement balance is. if you pay it off in full by the payment date then you won't be charged interest on your purchases that month. if you don't pay it off in full then you will be charged interest on everything even the amount you have paid off

So for example if you make £1,000 worth of purchases that month and your statement arrives and shows £1,000 balance and you pay £999 by the payment date leaving a £1 balance you will be charged interest on the full £1000 purchases

Jello123

I am still a little confused...

When you say I must pay off the full statement balance before the due date, do you mean the actual full balance OR just the portion that relates to purchase? Seeing as the purchase element has interest attached to it but the Money transfer portion does not?

[Deleted User]

The full balance, if you intend to avoid interest.

Jello123

Wow I did not expect that. I see why BT and purchases should be kept separate.

Ok so say the statement arrives and I pay the purchase balance of £500 + a little extra to cover interest charges, would it mean that I won’t be charged interest the following month as my balance would now only include the money transfer?

[Deleted User]

There will normally be some trailing interest the following month. After that, assuming you don't add any more purchases, there should be no more interest.

Jello123

Cool.

What happens if I make a payment of £500+ a little extra right now?

My statement is generated arround the 22nd each month. Payment due is usually 15th the following month.

So I am expecting a statement on 22 June with a payment date of 15 July.

MallyGirl

payments are applied against the statemented transactions so if the transaction hasn't appeared on a statement yet you may end up paying off some of your 0% BT and still having the interest incurring transaction there Just wait for the statement - pay enough to cover the interest and purchases, then next month pay any trailing interest. Do not use the card for any more purchases.