Multiple 0% interest balances -- why isn't MBNA crediting payments against them in order of expiry?

I have two 0% promotional rate balances on my MBNA credit card. One of the promotional rates expires in March and the other expires in August.

I have over the past few months been making payments to MBNA on this card, and I assumed that they'd credit my payments against the balance where the 0% rate expires in March. However, I have checked my statements and it appears that they have in fact been crediting them against the other balance. This is obviously less desirable from my point of view.

Any ideas why MBNA has done this? I had vaguely remembered that there was a regulation which said that credit card providers had to credit payments against the highest interest balance where there are multiple balances on the account, which I had hoped would extend to also crediting against the earliest-ending 0% balance.

Comments

  • MorningcoffeeIV
    MorningcoffeeIV Posts: 1,913
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    There is no requirement to apply payments to the first ending promo, where they are at the same rate.

    If you want a card that works in that way, you'll need to apply for one. The terms will tell you if they apply payment to the first ending, first starting or something else. 
  • DullGreyGuy
    DullGreyGuy Posts: 9,182
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    The change in regulations was only to say they must credit payments against the balance incurring the highest interest. The regulations didn't go further to say what happens when multiple balances have the same interest rates. As such it therefore falls to the T&Cs of the card in particular. 

    Their generic terms are:

    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 payment protection insurance) first. We may apply your payments differently if you are in persistent debt (see B7.8 for details).

  • Thanks for the help, both. That makes perfect sense, albeit that it's obviously not ideal from my point of view.

    As I do want to fully repay the balance which comes off its 0% period in March, I assume that I will need to wait until after the 0% period ends before I make a bullet repayment? Or otherwise my lump sum will be credited against the balance which has a 0% period ending in August. I realise this means incurring one month's interest on the balance which ends in March.
  • grumbler
    grumbler Posts: 58,629
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    edited 2 February at 3:43PM
    Thanks for the help, both. That makes perfect sense, albeit that it's obviously not ideal from my point of view.

    As I do want to fully repay the balance which comes off its 0% period in March, I assume that I will need to wait until after the 0% period ends before I make a bullet repayment? 
    Sounds like a good plan. And you can earn some interest meanwhile.
     I realise this means incurring one month's interest on the balance which ends in March.

    Why? Pay it off as soon as the interest kicks in. It's 1-2 days' interest, not month's

  • CliveOfIndia
    CliveOfIndia Posts: 1,197
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    Thanks for the help, both. That makes perfect sense, albeit that it's obviously not ideal from my point of view.
    Yep, this is always one to watch out for, and different cards do it differently.  Some will prioritise payments to the deal which started first, some will prioritise the deal than finishes first.  Whenever you've got 2 or more deals on the same APR running concurrently, there's no law about which one takes precedence, you need to check the T&Cs.

    As I do want to fully repay the balance which comes off its 0% period in March, I assume that I will need to wait until after the 0% period ends before I make a bullet repayment? ....... I realise this means incurring one month's interest on the balance which ends in March.
    What you could do is wait until the March deal expires then make a payment to cover that amount straight away - there's no need to wait until the statement arrives.  Since that portion of the debt would now be attracting a higher rate of interest than the other promotional rate, your payment would go to that portion of the debt.  That way you'd only be charged a day or two's interest, depending on the exact timings of when you make the payment.  This assumes that there's no other spending on the card.
    If you do do this, just be a little bit careful when the statement subsequently arrives - you'll still have to make the minimum payment as detailed on the statement.

  • lopsyfa
    lopsyfa Posts: 472
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    Have you tried to call MBNA to see if they can re-allocate the payment for you or if they can take the payment on the phone for you and allocate it to the earliest ending payment first.

    I am not saying they will definitely do it but it is worth a try.
  • Nasqueron
    Nasqueron Posts: 8,379
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    I had this with a card, I cannot remember which one though but it wasn't MBNA and I noticed the payments were going to the transfer that ended in say September not the one in May so I had to up payments to clear it as the May one would have started incurring interest. I did complain about this to the bank though they didn't give me anything cash wise annoyingly.
  • Thanks again for the help everyone. 

    I’ve been using 0% credit cards for years now, but this is the first time I’ve come across this issue. This will also be the first time I’ve ever paid any credit card interest. I only mention this to explain why my questions might seem a little naive! For example, I didn’t actually realise that credit card interest is calculated by the day (I thought it was by the month) so that’s great news. I will just pay off the balance the day after the 0% period ends. 
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