PayPal Credit rant

xukc15

I used PayPal Credit for some purchases taking advantage of 0% interest for 4 months offers. I made repayments every month and all was going well. Then I made a classical mistake - not reading the small print, too good to be true and all that. I made a bigger purchase, I bought a sofa on 18 monthly installments with interest (12.9% I believe). I thought I'd pay my monthly installments and still be able to pay off my previous 0% purchases before the promotions expire and interest rates kick in. Little did I know! I just noticed that my sofa balance keeps going down and but down but none of my other balances. So they are allocating all my repayments to that purchase, inevitably the other purchases will start generating interest as I can't clear them in time. I guess I should have expected this, I mean it's unlikely they are offering credit facility with any other purpose but to rake in as much interest as they can... But I still feel badly misled! It's the wording of their 'promotional offers' - 0% for 4 months, pay your balance before that and you won't get charged interest, x monthly installments. I believed the monthly installments were fixed! What they should be v upfront about, make it nice and clear - we'll allocate your repayments not in chronological order but in a way that makes us the most money.  I guess this is just a rant and a warning to others, I can't see there's anything to be done but repay the balance and all the interest they are going to charge me.

[Deleted User]

You mean they're applying your payments to the highest rate debt?  As the law says they must? And in a way that reduces the interest you pay?

The gits.

JimmyTheWig

When the 0% runs out, what rate will you be paying on that balance?
How much is that balance compared to the sofa purchase?

xukc15

Well I've not had other credit with this many 'special offers' so I found it all very misleading. Only  now I found in their terms that they allocate repayments to installment  plans first. So are you saying that after my 0% for 4 months offers expire and those purchases revert to higher interest rate, they should allocate my repayments to them?

[Deleted User]

Yes.  Your payments always go to your highest rate debt.

You really  wouldn't want it any other way.

D3xt3r5L4b

xukc15 said:

Well I've not had other credit with this many 'special offers' so I found it all very misleading. Only  now I found in their terms that they allocate repayments to installment  plans first. So are you saying that after my 0% for 4 months offers expire and those purchases revert to higher interest rate, they should allocate my repayments to them?

You mean you took out a credit product without reading the terms first?
Hmmmm.....

Tildaplum

sounds to me like a mistake anyone could make but it is better for you that all the funds you pay are allocated to the 12.9% rather than the 0%

Once your 0%  offer expires after 4 months your payments will go to the highest rate.

This way will save you intetest.

dazzaofdagenham

Think I got caught out almost same.
bought my daughter a Mac Book pro for her college work...think cost was £1600 over 12 months interest free.... paid £700 off in six months and by month 12 the only amount outstanding was about 70 pounds...so I thought by month 13 and month 14 the interest would be a very small amount.....
how wrong was I......it turns out if you don’t pay all the outstanding amount by the 12 month deadline, interest is backdated to the purchase date...and doesn’t take into account the payments you have made.

Tildaplum

That is really harsh...

D3xt3r5L4b

Tildaplum said:

That is really harsh...

Not really. 

Read the T’s and C’s and if you don’t like them don’t take the product. 

PaulW922

That is how this type of credit is supposed to work. If you have a balance charged at 0% and a balance charged at 12.9%, your payments must be used to pay down the 12.9% bearing balance first. That is the law and it is in your interests too - why would you want to keep the interest bearing balance higher than the zero % balance?