Life of Balance Transfers

NGJoice

Hi,
I have a Barclaycard with a life of balance transfer on it which was approx £3500. I have noticed that the balance on the life of balance transfer is increasing each month and is now in excess of £4k. I pay well over the minimum payment, enough to cover standard & balance transfer interest and then some actual repayment. I assumed that the payment would be allocated to standard interest, interest on the life of balance transfer and then to the remaining balance with the highest interest rate. Surely, therefore, the Life of Balance transfer should still be at it's original amount + the fee not slowly growing each month? 
Am I missing something or is it possible that payments have been allocated incorrectly? I have queried this with B/card but wondered if anyone else is having the same issue?
Thanks,
Nicola

Sandtree

It is now a requirement that payments received are made against the highest interest rate first (this is clearly better for you as a consumer).

If the balance of your non-promotional spending is therefore higher than your monthly payments then all of your payments will go against this as to minimise the interest you pay and so any reduced interest rate balances will continue to grow in the interim (though overall balance will reduce)

MinuteNoodles

And the above is why life of balance transfer offers are a bad deal if you continue to use the card for spending. You end up paying much more interest overall due to how little the balance transfer principle sum reduces. Any card you BT to should be considered no longer available for spending if you want to take full advantage of the BT.

As an example lets say you do £1000 spending/carried over from the previous month's statement and the combined interest that month on the spending and the BT is £300. Unless you repay at least £1301 then not a single pound will come off the amount BT'd as the £300 would be paying the interest and the remaining £1000 or less would be paying the capital down on the £1000 spent/carried over which was at a higher APR than the BT rate.

If in the above example you'd paid £1400 then £300 would cover the interest, £1000 would cover the spending and the BT principle sum would be reduced by £100.

It's not the interest and some of the actual repayment you need to be covering, it's the entire non-BT balance plus the interest you need to be covering and then some more in addition to that in order to pay off some of the BT balance.