Problem with multiple balance transfers on same credit card

devil_tez

I have three balance transfers on the same credit card, two interest free which expire this year and one low interest which doesn't expire till the end of next year. I've been trying really hard to get these paid off before the interest free periods expire and one of them expires next month so I paid £400 to pay it off however on my new statement I noticed it has not been paid off and there is a warning that I will now be charged high interest on it. What has been happening is for the past 18 months all my payments have been going onto the low interest offer rather than the two interest free offers that are due to end soon. I'm now in a real pickle and will never be able to get these debts paid off, has anyone else had this problem or know of a solution?

Ebe_Scrooge

That's how it should be.  Payments are allocated to the highest-interest debt first.  If you have two 0% offers running then the payment is normally (though not always) allocated to the one that ends soonest.  But the highest-interest debt is always prioritised.

[Deleted User]

Either increase your payments, or look for a balance transfer.  A trip to the DFW boards might also pay dividends.

Also start looking at your statements each month - it will show you the various balances and where the payments are being allocated. Useful if you're trying to get debts paid off. 

NewLeaf1986

This Hierarchy or payments allocation was decided by the regulator a few years ago:

Credit card companies are obliged to allocate your payments towards whichever balance is currently incurring the most interest, first.

As your low interest balance was incurring more interest than your zero interest balances, your repayments were allocated towards your low interest balance first.

Keep at it chipping away at the debt as best you can and see if you can get another BT offer from another credit card if you still owe anything when your 0% deal is coming to an end. 

MallyGirl

the only way to manage this better would have been to build up the money elsewhere to pay off the balance about to end its 0%, let it expire so it is now incurring the higher interest and make a one off payment the next day. You would only get hit with a day or 2 of interest that way

devil_tez

Thats a good idea MallyGirl I wish I'd known abut this as I could have done that.

NewLeaf1986

MallyGirl said:

the only way to manage this better would have been to build up the money elsewhere to pay off the balance about to end its 0%, let it expire so it is now incurring the higher interest and make a one off payment the next day. You would only get hit with a day or 2 of interest that way

Yes but you'd have been charged more interest on the interest-bearing balance in the mean time.

Just ditch and switch to another 0% deal when time's up 🙂