MBNA charged me interest on purchases paid off as they cleared it against 0% purchases instead.

smashed

Apologies for the title, any advice appreciated.

We have a 0% purchase offer on our MBNA credit card which has 12 months to run.

For security, I used the card to make a couple of online payments. For obvious reasons, I cleared the circa £600 bill within a week to avoid accruing interest (but ensuring payments had gone through etc).

However, upon checking my next 2 statements, I saw that I was being charged interest for all my payments. Upon closer inspection, they cleared my £650 payment against my interest free purchases, not my full APR payments. 

MBNA have advised that this is in their terms and that I had to wait for a statement (which guarantees interest ) before I could make payments against the new purchases.

As far as I was aware, MBNA legally have to deduct my payment against the highest interest rate? I can survive the £20 interest, but the principle is irritating me

Thank you

prowla

The T&Cs will say which order they apply payments to.

I once got caught out by that, so I closed the account.

[Deleted User]

smashed said:

As far as I was aware, MBNA legally have to deduct my payment against the highest interest rate? 

Legally, as long as it has statemented.

Always make sure you understand the payment allocation terms for each of your cards individually, so you use them in the best way 

confused.com2

I've fallen foul of this before. Used a card for an online purchase, as soon as it appeared online as a transaction I cleared the balance. Then my statement came through and the money had been deducted from my interest free, balance transfer balance, not my purchase balance. Because I'd been to keen and paid before the statement. Lesson learned!

Carrot007

Unstatemented things are last allocated on most cards (if not all).

Waiting for a statement with a 0% offer usually does not mean interest (Can't say for MBNA).

Why did you not use another card? Treat cards with 0% or any offers as not used until paid off for an easy life.

smashed

Thanks all, that was quick

I don't have any other credit cards.

It is cleared now, but £20 lesson learnt. 

Brie

Deleted_User said:

Always make sure you understand the payment allocation terms for each of your cards individually, so you use them in the best way 

Easier said than done.  I swear the make the T&Cs vague so you are guessing what some of them mean.  And this is then made worse by trying to get confirmation for the card company and you get the variation on the meaning from the individual on the phone or chat.  I've had completely contradictory statements on the same call when I've been passed from one individual to another.

Carrot007

Brie said:

Deleted_User said:

Always make sure you understand the payment allocation terms for each of your cards individually, so you use them in the best way 

Easier said than done.  I swear the make the T&Cs vague so you are guessing what some of them mean.  And this is then made worse by trying to get confirmation for the card company and you get the variation on the meaning from the individual on the phone or chat.  I've had completely contradictory statements on the same call when I've been passed from one individual to another.

Stop calling people, they work in a call centre. They do not know the T&C's. Calling them is just a waste of theirs and your times. They will often make up something that sounds plausable to get you to go away. The T&C's are clear if not write or email so it can get thorugh to the appropriate department. Or just use another card for different things.

molerat

MBNA are very clear how they allocate payments

B7.4 How we apply your payments
We use your payments to clear any overdue amounts before we apply them to your latest minimum payment.
We will reduce the amount you owe in the following order:
 any overdue amounts from previous statements; then
 the remaining balance on your statement; then
 any recent transactions not yet shown on your statement.
We use your payments to pay off balances charged at the highest interest rate first and so on down to balances with the lowest interest rates. This means the more expensive balances are always paid off first.
If there is more than one type of balance at the same interest rate, they are normally paid off in the following order: cash transactions, purchases, balance transfers and money transfers, and then default charges (plus any interest or charges incurred as a result of those balances). For each type of balance, your payments will pay off the oldest balance (and related fees, charges or insurance) first. We may apply your payments differently if you are in persistent debt (see B7.8).