Credit card advice

Chelle1

Hello

Please could I have some advice as I’m really confused. I wanted to buy a new car and the best way for me to fund this was by taking out a cash advance from my Virgin Money credit card. I was charged 4% fee which gave me 0% interest for 13 months. All good and I’ve been paying off a set amount each month and will have the balance clear within the time frame.

I had to purchase insurance and I put the amount on my credit card and paid this back in full within 3 weeks and before my statement date. Just received my statement and been charged over £12 in interest! I phoned Virgin to ask why and they said that for no interest to be charged on any purchases I would have to pay the ENTIRE BALANCE in full! So basically I’m now being charged interest on what should be 0% until next September! all because I made a purchase.

[Deleted User]

No you're not. That's not what they told you.

You've just being charged interest on the purchases as you didn't clear the entire balance.

Once you clear the purchases, there will be some trailing interest but no more after that, unless you make more interest bearing transactions.

Chelle1

I paid for the purchase in full within 3 weeks and before the statement date.
Usually you get free interest period if purchases are paid in full but basically I don’t get any free time because of the cash advance unless I clear the entire balance. So pretty pointless using that credit card now.

[Deleted User]

Hopefully you mean you paid it before the due date, rather than statement date, or it may still be sitting there.

It's always been the general advice not to mix interest and non-interest bearing transactions on the same card, unless you know exactly what you're doing.

Ben8282

Chelle1 wrote: »

ISo pretty pointless using that credit card now.

Well yes. You took a money transfer at 0% so that is fine but as you have no 0% offer on purchases and you are not repaying in full every month then yes you will be paying interest on any further purchases that you make. This is perfectly normal as you are not repaying the entire balance every month.

Chelle1 wrote: »

I paid for the purchase in full within 3 weeks and before the statement date.

Now I wonder why you did that. Do you normally pay before the STATEMENT date? You do realise that if the purchase had not yet appeared on a statement when you repaid it, the payment would have been applied to the balance shown on the previous statement and not the new purchase. So it loooks like instead of repaying the purchase you repaid some of the 0% money transfer.

SnowTiger

Chelle1 wrote: »

I paid for the purchase in full within 3 weeks and before the statement date.
Usually you get free interest period if purchases are paid in full but basically I don’t get any free time because of the cash advance unless I clear the entire balance. So pretty pointless using that credit card now.

Generally, it's not a good idea to use a card that's already carrying a promotional balance.

https://creditcards.virginmoney.com/VM_InstantApp/application/documents/creditAgreement/VM4781.pdf:

7.2. We will not charge interest on Card Purchases and related fees, as long as you pay the full balance shown on your statement by the payment date. Otherwise, we will charge interest each day on all transactions and related fees, on unpaid interest and on any other amounts, from the date they are added to your account until you pay them off in full.

[...]

11. How does Virgin Money allocate payments?

We will always pay off existing balances that appear on your statement, before any new transactions that you have made, but are not yet shown on a statement.

It appears the payment you made was allocated against your 0% cash advance.

I suspect you'll have to pay it again, plus interest, to stop additional interest being charged.

born_again

The fact you paid before statement date means that the amount you paid that you thought covered for the ins payment. Went towards the balance transfer.
You have not made any payment to the ins payment at all.
So on the statement you got with the £12 interest is correct. As you have interest on the ins amount.

You are not alone in getting caught out by this.
That is why it is best not to make any payment until you receive a statement. Even more so if you have a promotion period amount.

You could ring back and ask if they will waive the interest charge as you were not aware of how paying early would effect you.
We will often refund as a good will gesture once.

fatbelly

Martin's article on these cards is pretty clear

https://www.moneysavingexpert.com/credit-cards/money-transfers/

and his golden rules are:

1. Minimise what you borrow
2. Repay at least the minimum each month
3. Never spend or withdraw cash on these cards
4. Use our free eligibility calc to find your odds
5. You won't always get the headline deal

Chelle1

Thank you for all the replies. Lesson learnt ��