Tesco Money Transfer - Interest Unfairly Charged?

edam

Hi all,

Quick question regarding money transfers with Tesco, just using some illustrative figures, as I think I've been charged interest wrongly but Tesco say its correct.

I had a spending card with, e.g. £1,000 in purchases on it. Ive been using this for years, always paying off the purchases when I get the monthly statement.

It had a 0% money transfer offer on it which I took advantage of and borrowed e.g. £5,000

I then received my monthly statement with two balances

1. Purchases with 1.66% monthly interest, balance £1,000
2. Money transfer with 0% interest, balance £5,000

Payment to be made by 2 September 2021

I paid £1,500 before 2 September 2021 on that statement. The statement said that the balance with the highest interest would be paid of first. I therefore expected purchases and some of the balance transfer to be paid off. I therefore expected the purchase balance to clear, and some to come off the money transfer balance.

Instead, Tesco allocated all of the £1,500 to the money transfer balance, none of the purchases, and in my following statement I had an interest charge on my purchases!

I had planned (and have always planned and always made payments as intended) to continue spending on the card and always paying off the purchase balance upon receipt of the monthly statements. That's what I've always done. I would then ensure the money transfer is paid off in full before the end of the 0% period.

Tesco told me no, its correct, and once I take out a money transfer I cant do any spending otherwise that will incur interest.

There's nothing in the terms and conditions about this, (although it does say interest will be charged unless "the balance" is paid in full), however I've got the promotional balance on the money transfer plus the allocation schedule which says interest baring balances will be allocated first.

Am I going completely mad or have Tesco got this wrong?

Cheers

[Deleted User]

Your payment will have gone to the purchases as the highest interest bearing balance, but you can't avoid interest as you didn't clear the entire balance in full.

This is standard in all but a handful of credit cards 

Don't mix interest bearing transactions with a 0% balance.

edam

Deleted_User said:

Your payment will have gone to the purchases as the highest interest bearing balance, but you can't avoid interest as you didn't clear the entire balance in full.

This is standard in all but a handful of credit cards 

Don't mix interest bearing transactions with a 0% balance.

Hi

So what would the interest have been charged on? The purchases were all paid off before the due date, and no interest attracts on the money transfer?

molerat

There are 2 different things going on here

1) interest on purchases

2) allocation of payments

 For 1 Tesco are correct in that all purchases will attract interest from day 1 as you are not paying off the total card outstanding balance.  This is true for the vast majority of cards with one or two exceptions.

 For 2 all payments should be allocated to the highest interest transactions which should be the purchases - you need to check the outstanding balances on each.

And, as per zx81, don't mix transfers and purchases on the same card.

msallen

You pay interest on purchases from the purchase date (well, the date the shop claims it from the card issuer) unless the previous statement was cleared in full. Purchases are not free until statement due date when carrying any balance, even if that balance is interest free.