0% on Purchases

Just a quickie or two...
1. My new credit card is 0% on purchases for the first 60 days, lasting 20 months. If I spent £200 (randomly chosen amount) within those 60 days, and then another £200 after the 60 days, paid £200 off of the first statement after the the 60 days, how would it know which £200 I was paying? I'd imagine the credit card companies system would work out that the first £200 is interest free and anything over this amount is subject to interest? I appreciate i'll still need to pay the minimum on each statement, but I hope you understand what I mean.
2. If buying using paypal using the card, would this still count as a purchase? And if so, would sending money via friends and family as opposed to goods and services count as a purchase? Just trying to cover all angles and will ask this is in a paypal forum if I can find one here.

Tried google and my cards website/welcome leaflets and all sorts of answers but not answers to these as far as I can see.

Thanks in advance for any guidance.

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  • 2022ismyyear
    2022ismyyear Posts: 19
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    edited 27 May 2020 at 7:12PM
    Gellar9 said:
    Just a quickie or two...
    1. My new credit card is 0% on purchases for the first 60 days, lasting 20 months. If I spent £200 (randomly chosen amount) within those 60 days, and then another £200 after the 60 days, paid £200 off of the first statement after the the 60 days, how would it know which £200 I was paying? I'd imagine the credit card companies system would work out that the first £200 is interest free and anything over this amount is subject to interest? I appreciate i'll still need to pay the minimum on each statement, but I hope you understand what I mean.
    2. If buying using paypal using the card, would this still count as a purchase? And if so, would sending money via friends and family as opposed to goods and services count as a purchase? Just trying to cover all angles and will ask this is in a paypal forum if I can find one here.

    Tried google and my cards website/welcome leaflets and all sorts of answers but not answers to these as far as I can see.

    Thanks in advance for any guidance.

    Hey ☺️

    In answer to your questions:

    1. Your credit company tracks your spending and applies the correct interest rate to that wether it be the promotional offer 0% or the standard rate. When you receive your first credit card statement it will list each balance next to each rate. 

    So each time you spend any money on the card it will categorise your spending into the correct interest rates and also show any expiry dates of any promotional offers you may have. 

    Also on your statement it will state what order your payments are applied to your account in some credit companies they do it via date order e.g which promo offer is expiring first and then apply the payments, some also may do it via highest interest accusing balance first and others may do it with whichever balance is oldest in date order you can check how payments are applied on your first statement.

    Example:

    £200  Purchase Promotional Rate 0% expiry on 14/06/2021

    £200 Standard Purchase Rate 34% 


    2.  I got this from the PayPal website:

    “Do I get charged a cash advance fee when I use my credit or debit card to make a payment?

    No. When you use your credit or debit card, you will not be charged a cash advance fee for sending money for goods or services. Payments made as a gift or to friends and family are charged a fee that the sender can either pay themselves or opt to have the receiver pay.

    For these types of transactions, PayPal charges your credit or debit card only for the transaction amount.

    Note: If you make a cash advance purchase with a credit or debit card, the card issuer may charge a cash advance fee. PayPal has no control over third-party fees. To avoid incurring fees when making a cash advance purchase, you may want to use a different payment method, such as your bank account or an e-Check.”


    I hope that helps.

    January 2020 - £17.5k
    June 2020 - £12k
  • Gellar9
    Gellar9 Posts: 48
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    Gellar9 said:
    Just a quickie or two...
    1. My new credit card is 0% on purchases for the first 60 days, lasting 20 months. If I spent £200 (randomly chosen amount) within those 60 days, and then another £200 after the 60 days, paid £200 off of the first statement after the the 60 days, how would it know which £200 I was paying? I'd imagine the credit card companies system would work out that the first £200 is interest free and anything over this amount is subject to interest? I appreciate i'll still need to pay the minimum on each statement, but I hope you understand what I mean.
    2. If buying using paypal using the card, would this still count as a purchase? And if so, would sending money via friends and family as opposed to goods and services count as a purchase? Just trying to cover all angles and will ask this is in a paypal forum if I can find one here.

    Tried google and my cards website/welcome leaflets and all sorts of answers but not answers to these as far as I can see.

    Thanks in advance for any guidance.

    Hey ☺️

    In answer to your questions:

    1. Your credit company tracks your spending and applies the correct interest rate to that wether it be the promotional offer 0% or the standard rate. When you receive your first credit card statement it will list each balance next to each rate. 

    So each time you spend any money on the card it will categorise your spending into the correct interest rates and also show any expiry dates of any promotional offers you may have. 

    Also on your statement it will state what order your payments are applied to your account in some credit companies they do it via date order e.g which promo offer is expiring first and then apply the payments, some also may do it via highest interest accusing balance first and others may do it with whichever balance is oldest in date order you can check how payments are applied on your first statement.

    Example:

    £200  Purchase Promotional Rate 0% expiry on 14/06/2021

    £200 Standard Purchase Rate 34% 


    2.  I got this from the PayPal website:

    “Do I get charged a cash advance fee when I use my credit or debit card to make a payment?

    No. When you use your credit or debit card, you will not be charged a cash advance fee for sending money for goods or services. Payments made as a gift or to friends and family are charged a fee that the sender can either pay themselves or opt to have the receiver pay.

    For these types of transactions, PayPal charges your credit or debit card only for the transaction amount.

    Note: If you make a cash advance purchase with a credit or debit card, the card issuer may charge a cash advance fee. PayPal has no control over third-party fees. To avoid incurring fees when making a cash advance purchase, you may want to use a different payment method, such as your bank account or an e-Check.”


    I hope that helps.

    Thanks.
    Hopefully then they'll make it clear to me as it wouldn't make sense to offer 0% for the first  60 days purchases for 20 months,  and then take apply payments to that first if their is any balance to pay outside the promotional period.

    I think paypal can be confusing. I may just make a normal card purchase as opposed to go through paypal.

    Thanks again.
  • jimmo
    jimmo Posts: 2,278
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    All of my credit cards apply payments you make to "Statemented Balances" first.

    Then, if necessary, they allocate to the "Statemented Balances" with the highest rates first.

    So in your example your first month's Statemented Balance would be £200 (all at 0%)

    During your second month you will then spend £200 on purchases making you in debt by £400 and subsequently pay £200 off that total debt.

    All my cards would allocate the £200 payment to the Statemented Balance £200 (at 0%).

    Nothing would have been allocated to the debt bearing standard interest because, at the time of your payment, it was not a Statemented Balance.


  • molerat
    molerat Posts: 31,550
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    Also any purchases you make after the 60 day initial period will have interest applied from the date of purchase if you have not paid off the interest free balance in full.  The usual wisdom is not to mix the spending on these cards, make a big spend within the initial period and put the card away paying off the balance over the interest free period. You either treat it as an interest free card or a spending card paying off each statement in full which
  • redux
    redux Posts: 22,976
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    If you do some spending on the card, make it a modest amount not much more than the minimum monthly payment, and you can save a bit of interest by moving your payment forward to the day after the statement date.
  • Gellar9
    Gellar9 Posts: 48
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    jimmo said:

    All of my credit cards apply payments you make to "Statemented Balances" first.

    Then, if necessary, they allocate to the "Statemented Balances" with the highest rates first.

    So in your example your first month's Statemented Balance would be £200 (all at 0%)

    During your second month you will then spend £200 on purchases making you in debt by £400 and subsequently pay £200 off that total debt.

    All my cards would allocate the £200 payment to the Statemented Balance £200 (at 0%).

    Nothing would have been allocated to the debt bearing standard interest because, at the time of your payment, it was not a Statemented Balance.


    molerat said:
    Also any purchases you make after the 60 day initial period will have interest applied from the date of purchase if you have not paid off the interest free balance in full.  The usual wisdom is not to mix the spending on these cards, make a big spend within the initial period and put the card away paying off the balance over the interest free period. You either treat it as an interest free card or a spending card paying off each statement in full which
    redux said:
    If you do some spending on the card, make it a modest amount not much more than the minimum monthly payment, and you can save a bit of interest by moving your payment forward to the day after the statement date.
    jimmo - Many thanks. It would nice if they made it clear (and maybe they will on the statements)

    molerat - I think you are right for me to just use it for the 0% period, which is what I had planned anyway. It was just a question in case I used it again. I only really need to use the 0% and will probably pay that off within 2-3 months anyway. Thanks.

    redux - Interesting idea. All for saving interest, even better if I pay none! :) thanks.
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