Multiple rates on single card

Windofchange

Hi all,

I recently did a balance transfer onto an existing card that I own, which all worked fine. The card now has this new amount (0% for 18 months) plus the existing 0% deal which runs out next month. What I am planning to do is to do the same thing the other way to put the debt that is about to go interest bearing onto a 0% deal on the other card. Hope that makes sense.

My question is how is the debt worked out? What I want is for the part of the card that will start to accrue interest to be transferred over and not the part of the debt that I have just put onto a 0% rate for 18 months. In other words, for the card with the old and the new debt on it, I want the old debt transferred so it doesn’t start to build interest. Is this automatic? I read somewhere I think that credit card companies have to prioritise repayments over the minimum to the highest interest bearing debt, therefore the balance transfer should automatically be applied to the debt that is about to go interest bearing? Do I need to wait until it does, or will the oldest debt be paid first? 

[Deleted User]

You need to read your terms. When two balances are at the same rate, the allocation may go to the one that started first, finished first, or something else.

Once one balance goes to the go to rate, the payment will automatically go to that balance.

Ebe_Scrooge

The short answer is, it depends.  The standard rule is that payments are allocated to the highest-rate debt first.  If you've got two 0% promotions running, then you must check your statement, or the T&C's online to see how payments will be allocated.  Most banks will allocate payments to the promotion that's due to expire soonest - but if you check the T&C's it will tell you for certain.

If you wait until the old promo expires, and starts to attract interest, then do the BT, you'll be sure the BT will go towards the interest-bearing debt.  But there should be no need to do that, unless the T&C's state that payments will go towards the promo that was started most recently (unlikely, but worth checking).

Brie

You could ask them.  I have to check every month with M&S as it has both 0% & purchases but the statements don't show the BT at all.  And without asking I would inevitably over pay.

If however it's an MBNA card (or many others) there is a list on each statement showing how much is owed on your BTs.  Your DD is being appied against the BT done first and will continue to do so whether you pay it off or not.  If the end date is before your next DD is to be taken then you can use the amount on the statement and pay that (or transfer) a couple of days before the 0% ends.  When the next DD comes along it will be paid against the next BT you took out.

The only time this doesn't work is when you take out a BT for 24 months and then a month later take out a BT for 12 months.  All the DDs will go against the 24 month BT until the 12 month BT changes to the higher interest rate.  With that situation you have to wait for the higher rate to be invoked before you pay off that debt.

Hope that makes sense.

Windofchange

Ok thanks all. I’ll have a check of the T&C’s, but that all largely confirms my thoughts that the debt attracting interest / ending soonest is prioritised. The closest one to expiring is November 2nd, so might initiate the balance transfer on the 3rd - a day of interest is no bother. 

molerat

Windofchange said:

Ok thanks all. I’ll have a check of the T&C’s, but that all largely confirms my thoughts that the debt attracting interest / ending soonest is prioritised. The closest one to expiring is November 2nd, so might initiate the balance transfer on the 3rd - a day of interest is no bother. 

The first part of that statement is correct but the second part is down to the T&Cs of the card many clearing the earliest starting balance.