Virgin Money Credit Card - Sneaky Practice!

valmade

I have a Virgin Money Credit Card with a 0% interest balance transfer on it.  I recently discovered something which although appears to be in their T&Cs I feel is a very sneaky practice and wanted to hear other people's opinions.

If I did not have the balance transfer element I would purchase something and that would be interest free until it hit the statement and as long as I paid the whole balance off by the due date there would be no interest charged.

Having the balance transfer amount however, apparently counts as part of your total balance and therefore even though I pay off the whole amount of any monthly purchases I am being charged interest as they class it as not having cleared your entire balance.

In addition, the interest starts the minute whatever I have purchased hits the account not when the new statement is issued.  So, in short you are not getting any interest free period.

To add to this, if I pay the whole amount of my purchases they still take the direct debit amount on the due date so if you pay the difference and wait until the due date for them to take the balance you are being charged interest every day on that outstanding balance.

I find this incredibly sneaky and a way they are charging their clients extra interest unfairly.

So, lesson learned and I will no longer be using that card for any daily purchases and will get rid of it once the balance transfer is done.  I would suggest anyone that has one to look into it carefully and if you are looking at using them for a balance transfer to use it for only that and nothing else.

[Deleted User]

It's not sneaky.  It's been standard practice on nearly all cards for decades.

There are a couple of exceptions, but the general advice has always been not to mix purchases with a BT unless you really know what you're doing.

valmade

I have the same set up with Barclaycard and I do not get charged interest if I pay off my monthly spending.
As I said I know it is in the T&Cs but I feel it is an underhand way of charging people extra interest.

Grabs39

That’s been the case for all credit cards I’ve ever had.

As long as you pay off the full balance each month then you won’t be charged for purchases.  I’d suggest separate cards for purchasing and balance transfers.

valmade

Grabs39 said:

That’s been the case for all credit cards I’ve ever had.

As long as you pay off the full balance each month then you won’t be charged for purchases.  I’d suggest separate cards for purchasing and balance transfers.

I do pay off the full balance of purchases every month and reduce the balance of the interest free amount, but am being charged interest on my purchases as I have not cleared the full amount of the interest free amount.  To me that defeats the purpose of the balance transfer amount. 
Easily solved I know by not using the card any more for purchases, but I was surprised by this practice.
I have lived overseas for many years so still getting to grips with the UK financial system again and just think this is a bit sneaky.

onlyfoolsandparking

It's definitely not sneaky, maybe a little unfair as with Barclaycard you can pay off purchases 'IN FULL' whilst having a BT in place and they don't then charge interest on said purchase/s whereas Virgin operate as you say, they charge interest from day 1 if you don't clear the full balance INCLUDING any BT. I have both Barclaycard and Virgin, I find them both good cards, good deals, decent limits, I just know after reading T&C,s thoroughly that if I do want to make a purchase on any of these cards and they are both carrying BT,s I always choose Barclaycard, pay the purchase of in full AFTER it statements, no chance of being charged or having to pay any extra interest.   
I think Barclaycard are one of only a few card providers that allow this practice of 'up to 56 days interest free' whilst carrying a promotional balance, there probably are others but I don't know which ones they are. 

Thrugelmir

Terms and conditions are provided for good reason. Never wise to assume anything. 

zagfles

The thing to realise is that not getting charged interest if you clear the balance in full is a specific exception to usual interest charging practice. The usual thing is to be charged interest on debt.

So if you want to take advantage of that exception, which of course many do, you need to make sure you comply with the condition for the specific exception.

PaulW922

Don't forget that all payments are set against the most expensive debt first - so the interest bearing balance will be reduced before the zero percent balance. And it ha been the case that interest is charged from the purchase date on all cards for many years AFAIK

PixelPound

You say Virgin Money so looking at my statement it says

Please note, we'll still collect this even if you make additional payments. We'll only reduce the amount we collect if it's going to put your account in credit following additional payments or refunds we've received.

So it's clear it will take DD even if you pay what you spent. As to whether you get charged interest on spends

Payments are allocated to balances with the highest rate of interest first. Full detail of how we allocate payments can be found in the Key facts section.

So you may need to check yours.

I once got stung 20 years ago, so now I never mix cards, always use a separate card for purchases and BT.

The relevant "key facts" of mine says

We will allocate your payments in the following way:
> We will repay balances with the highest interest rates first, before repaying those with lower interest rates.
> 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.

So if you pay the amount on your statement that purchased the month before, plus any trailing interest it should be okay. If you are trying to pay off what you have just spent since the last statement cut off date it won't work.

Mr87

I understand where you are coming from, this happened to me after doing a BT for the first time. Lesson learned.

Seeing as we're on the subject of spending on top of a BT, I assume that if you paid enough to cover the purchases when your statement arrived (rather than waiting until the due date) this reduces any trailing interest the following month?