Payment Allocation

Morning All, 
I've had a couple of credit cards for a few years. Only used them for money transfers when i needed cashflow and then balance transfers between them so never paid interest. 
Now money transfers are not available anymore - i've had to use my Barclaycard  for the first time as a spending card to get car through MOT repairs. 

Now my lack of knowledge comes through on what happens to my balance. The card has two balance transfers to Apr 2024 and June 2024 totaling about £3k.

I will be able to pay off the car repairs by next statement are my interest free periods safe or will they now accumulate interest?
Thanks
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Comments

  • MattMattMattUK
    MattMattMattUK Posts: 8,587 Forumite
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    PDplum said:
    Morning All, 
    I've had a couple of credit cards for a few years. Only used them for money transfers when i needed cashflow and then balance transfers between them so never paid interest. 
    Now money transfers are not available anymore - i've had to use my Barclaycard  for the first time as a spending card to get car through MOT repairs. 

    Now my lack of knowledge comes through on what happens to my balance. The card has two balance transfers to Apr 2024 and June 2024 totaling about £3k.

    I will be able to pay off the car repairs by next statement are my interest free periods safe or will they now accumulate interest?
    Thanks
    You will be charged standard interest on the new transactions, the existing balance transfers will not attract interest unless you do not meet your minimum payment requirements. 
  • Belenus
    Belenus Posts: 2,548 Forumite
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    edited 7 March 2023 at 1:51PM
    Read your latest statement. This is from my last Barclaycard statement

    Allocation of Payments

    Your payments will be applied in the following order:
    • To make any instalment plan payments due for that month.
    • To reduce your main balance (your statement balance less any instalment plan
    balance). We’ll start with the balances charged at the highest interest rate first and then
    reduce the lower rate balances, and then
    • If you’ve taken out any instalment plans, to reduce any remaining instalment plan
    balance.
    Please see your Barclaycard Conditions for further details.

    I interpret that as meaning, if you pay the full MOT spend in addition to the normal minimum monthly payment in time then you should not be charged any interest.

    Read the full Barclaycard Conditions in case I am wrong.
    A man walked into a car showroom.
    He said to the salesman, “My wife would like to talk to you about the Volkswagen Golf in the showroom window.”
    Salesman said, “We haven't got a Volkswagen Golf in the showroom window.”
    The man replied, “You have now mate".
  • grumbler
    grumbler Posts: 58,629 Forumite
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    Belenus said:
    Read your latest statement. This is from my last Barclaycard statement

    Allocation of Payments

    Your payments will be applied in the following order:
    • To make any instalment plan payments due for that month.
    • To reduce your main balance (your statement balance less any instalment plan
    balance). We’ll start with the balances charged at the highest interest rate first and then
    reduce the lower rate balances, and then
    • If you’ve taken out any instalment plans, to reduce any remaining instalment plan
    balance.
    Please see your Barclaycard Conditions for further details.

    I interpret that as meaning, if you pay the full MOT spend in addition to the normal minimum monthly payment in time then you should not be charged any interest.


    Not sure how you made this conclusion...
  • CliveOfIndia
    CliveOfIndia Posts: 1,332 Forumite
    First Anniversary First Post Name Dropper
    PDplum said:
    Morning All, 
    I've had a couple of credit cards for a few years. Only used them for money transfers when i needed cashflow and then balance transfers between them so never paid interest. 
    Now money transfers are not available anymore - i've had to use my Barclaycard  for the first time as a spending card to get car through MOT repairs. 

    Now my lack of knowledge comes through on what happens to my balance. The card has two balance transfers to Apr 2024 and June 2024 totaling about £3k.

    I will be able to pay off the car repairs by next statement are my interest free periods safe or will they now accumulate interest?
    Thanks
    You will be charged standard interest on the new transactions, the existing balance transfers will not attract interest unless you do not meet your minimum payment requirements. 
    This is correct.  Unless you pay the full statement balance, you'll be charged interest as usual.  The Balance transfer amounts will attract interest at 0% whilst the new spend will attract interest at the card's standard rate.  So the only way to avoid paying interest is to pay the full statement balance (Balance transfer + new spending).
    This is why the advice is always to avoid spending on a BT card.

  • km1500
    km1500 Posts: 2,302 Forumite
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    yes, as above. Don't spend on your BT card - get a separate card for that. Put your BT card away in a locked drawer !
  • Belenus
    Belenus Posts: 2,548 Forumite
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    edited 7 March 2023 at 3:57PM
    grumbler said:
    Belenus said:
    Read your latest statement. This is from my last Barclaycard statement

    Allocation of Payments

    Your payments will be applied in the following order:
    • To make any instalment plan payments due for that month.
    • To reduce your main balance (your statement balance less any instalment plan
    balance). We’ll start with the balances charged at the highest interest rate first and then
    reduce the lower rate balances, and then
    • If you’ve taken out any instalment plans, to reduce any remaining instalment plan
    balance.
    Please see your Barclaycard Conditions for further details.

    I interpret that as meaning, if you pay the full MOT spend in addition to the normal minimum monthly payment in time then you should not be charged any interest.


    Not sure how you made this conclusion...
    I interpreted 'We’ll start with the balances charged at the highest interest rate first and then..' in that way but I also suggested the OP should read the full conditions.

    If the BT amount is £1,000 with 0% interest, a minimum monthly payment of say £50 and the MOT charge is say £50, then paying £100 should clear the MOT charge plus the monthly minimum payment.

    That is my interpretation. Maybe Barclaycard mean something different.

    I have a few BT cards for stoozing only. I never spend on them so I have never had to consider this before.

    Does anyone have a definitive answer?
    A man walked into a car showroom.
    He said to the salesman, “My wife would like to talk to you about the Volkswagen Golf in the showroom window.”
    Salesman said, “We haven't got a Volkswagen Golf in the showroom window.”
    The man replied, “You have now mate".
  • CliveOfIndia
    CliveOfIndia Posts: 1,332 Forumite
    First Anniversary First Post Name Dropper
    edited 7 March 2023 at 4:31PM
    Belenus said:
    grumbler said:
    Belenus said:
    Read your latest statement. This is from my last Barclaycard statement

    Allocation of Payments

    Your payments will be applied in the following order:
    • To make any instalment plan payments due for that month.
    • To reduce your main balance (your statement balance less any instalment plan
    balance). We’ll start with the balances charged at the highest interest rate first and then
    reduce the lower rate balances, and then
    • If you’ve taken out any instalment plans, to reduce any remaining instalment plan
    balance.
    Please see your Barclaycard Conditions for further details.

    I interpret that as meaning, if you pay the full MOT spend in addition to the normal minimum monthly payment in time then you should not be charged any interest.


    Not sure how you made this conclusion...

    Does anyone have a definitive answer?
    It is confusing.  Firstly, you need to understand that the rule for all credit cards is that any statemented item accrues interest from the date of transaction until it's repaid.  But if you repay the full statement balance, then any accrued interest is waived.
    Secondly, consider the interest rate being charged.  This is where it gets a bit pedantic and a bit "semantics", but it's important to understand.  On a 0% promotional offer, the balance still accrues interest, but at 0%.  So it's not the case that you're "not charged interest", rather that you're charged interest at 0%.
    Now, a straightforward balance transfer scenario.  You transfer £1000 and pay the minimum each month.  The balance attracts interest, just at 0%, so it costs you nothing.  Every month that you fail to repay in full, you get charged interest at 0% - so £0.
    Now comes the killer.  You go and make a purchase (assuming you don't have a 0% purchase offer as well).  The remaining BT balance attracts interest at 0%, and the purchase attracts interest at 30% or whatever.  If you were to pay the full statement balance then no problem, the accrued interest would be waived.  But if you pay less than the full amount, you'll be charged interest - £0 on the BT portion, and £5 (for example) on the purchase portion.  And you'll continue to be charged interest each month until the full statement balance is cleared.
    Yes, it takes a bit of getting your head round, but hopefully this helps in some way to clarify how it works.


  • Belenus
    Belenus Posts: 2,548 Forumite
    First Anniversary Name Dropper First Post
    Thanks Clive.

    Now comes the killer.  You go and make a purchase (assuming you don't have a 0% purchase offer as well).  The remaining BT balance attracts interest at 0%, and the purchase attracts interest at 30% or whatever.  If you were to pay the full statement balance then no problem, the accrued interest would be waived.  But if you pay less than the full amount, you'll be charged interest - £0 on the BT portion, and £5 (for example) on the purchase portion.  And you'll continue to be charged interest each month until the full statement balance is cleared.

    Can they really charge interest until the full statement balance is cleared?

    If you pay off the MOT charge in full, plus the monthly minimum, plus any interest due on the MOT charge in the first month, then surely you have cleared all the balance that is not at 0% interest.

    Does  'We’ll start with the balances charged at the highest interest rate first and then..' not apply?


    I'm glad I have never used my zero interest BT cards for spending.


    A man walked into a car showroom.
    He said to the salesman, “My wife would like to talk to you about the Volkswagen Golf in the showroom window.”
    Salesman said, “We haven't got a Volkswagen Golf in the showroom window.”
    The man replied, “You have now mate".
  • Martico
    Martico Posts: 960 Forumite
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    My experience with Barclaycard was that at one point I had an ongoing 0% balance transfer that I was steadily paying off. 
    I'd forgotten to switch my Microsoft365 DD (I think - either that or Dropbox Pro) from the Barclaycard.
    I paid that off straight away, didn't wait for it to be statemented, didn't pay a penny in interest and carried on as before.
    Other lenders may not have the same rules
  • grumbler
    grumbler Posts: 58,629 Forumite
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    edited 7 March 2023 at 8:34PM
    https://www.barclaycard.co.uk/content/dam/barclaycard/documents/personal/existing-customers/terms-and-conditions-barclaycard-core-2020.pdf

    If you pay your main balance (excluding any promotional balance with a 0% interest rate) plus any instalment plan payments due for that month in full by your payment due date, the following will apply that month: We won’t charge interest on new transactions that have been added to your account since your last statement.
    So, @Belenus seems to be right - no interest on new purchases if they are paid in full.
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