mixed promo and non-promo debt on credit card -- which one am I paying off?

mfs2

Hello, I have a credit card (MBNA), which has a promo offer: purchases made on the first 60 days are interest-free for 12 months. I made a lot of purchases (£8000) in the first 60 days and stopped, but then accidentally made one more smaller purchase (£35) after the promo period. This debt is not interest-free apparently.

If I make a partial payment now (£200, the minimum), which part of the debt is it going to pay off? Is it going to clear this £35 and I'm interest-free again?

grumbler

https://www.mbna.co.uk/assets/pdfs/terms-and-conditions/general-credit-card-terms-and-conditions.pdf

>> B7.4

It's some ' Draft Credit Card Terms and Conditions', but I'm sure the principle is general.

mfs2

> 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.

Thanks, that's very reassuring! I was scrolling up and down this document for a while, thanks for finding it.

msallen

Note that the payment will only go to the highest interest debt once it is statemented - i.e. if you only spent it a few days ago and it hasn't appeared on a statement yet, then the payment will not go towards it.

DullGreyGuy

Legally they must apply payments to the balance currently with the highest interest rate.

Where it comes down to their choice/rules is where you have more than one balance with the same interest today in which case they could apply it to the one who's rate ends first or last.

Ebe_Scrooge

DullGreyGuy said:

Legally they must apply payments to the balance currently with the highest interest rate.

This is correct - with the caveat mentioned by msallen that you need to make sure the interest-bearing purchase has been statemented at the point you make the payment.

DullGreyGuy said:

Where it comes down to their choice/rules is where you have more than one balance with the same interest today in which case they could apply it to the one who's rate ends first or last.

This is always one to watch out for, and means you need to read their T&Cs.  If you have two promotions running concurrently with the same interest rate, some banks will prioritise payments to the deal which started first, some to the one that ends first.

born_again

msallen said:

Note that the payment will only go to the highest interest debt once it is statemented - i.e. if you only spent it a few days ago and it hasn't appeared on a statement yet, then the payment will not go towards it.

Do not pay it till you actually get the statement at the end of that billing period. Paying it before will go straight against the previous months balance.

hmc279

MBNAs PDF statements should show you a list of your various balances against each promo rate / standard rate

As others have said, this won't reflect purchases made after the date at which the statement was taken