Balance transfer

Beech87

Please could I have some advice on this situation.

Got a Tesco credit card with 0% balance transfer. The balance transfer expires in 12 months (approx) and has a balance of £1300. Making payments of £100pm.

Ive had to make a purchase on the card, for £1800. Which is being charged interest.

So not my monthly payment is mainly going on the interest, and not reducing the balance transfer.

I have a good credit score. If I opened up a new balance transfer card, could I move that purchase amount over? Or would it not allow me to, and would this transfer automatically take the balance transfer balance? I can then continue paying the £100pm of the original amount. And then another £75 DD on another card over 24months to clear. 

Thank you. 

Gandalf644

Beech87 said:

Please could I have some advice on this situation.

Got a Tesco credit card with 0% balance transfer. The balance transfer expires in 12 months (approx) and has a balance of £1300. Making payments of £100pm.

Ive had to make a purchase on the card, for £1800. Which is being charged interest.

So not my monthly payment is mainly going on the interest, and not reducing the balance transfer.

I have a good credit score. If I opened up a new balance transfer card, could I move that purchase amount over? Or would it not allow me to, and would this transfer automatically take the balance transfer balance? I can then continue paying the £100pm of the original amount. And then another £75 DD on another card over 24months to clear. 

Thank you. 

Forget credit scores – they are just a number made up by Credit Reference Agencies that lenders never see. It is your credit history and such as affordability which counts when applying for new credit.

You really need to look into the t&c’s of your Tesco card to see if a new BT payment will fully reduce the interest-bearing balance or not.If it doesn’t you may need to look into transferring the entire balance to a new 0% BT card. 

You could in effect overpay this card by using what you currently pay every month.Ideally you should only use a BT card for the BT and not spend on it, as having interest free and interest bearing balances, with differing end dates can complicate matters. 

If you need a card for spending which you cannot fully pay off in the first month, also try to open a 0% spending card.

SuperAllyB

As long as your purchase has appeared on a statement, and not just shown online, then legally any balance transfer should pay it of first.  To the receiving card a BT isn't any different to any other payment.

CliveOfIndia

Any payment (whether in the form of an actual payment made by you or a balance transfer) will be prioritised to the highest-rate portion of the debt.

However, here's the clincher.  For most cards, if you don't clear the full balance then the accrued interest becomes payable.  Check the T&Cs carefully, but this is why the advice is never to spend on a BT card.  There are a few cards (I think Barclaycard is one ???) which will "ringfence" the BT portion, so if you clear the spending you're back to paying no interest.  But for most cards you need to clear the whole balance.

If that's the case with Tesco, you'd need to BT the whole amount.

Beech87

Morning, 

thank you for the replies. The purchase is showing on the statement and the balance is split as £1300 balance transfer and £1800 purchase. 

I was just worried that I would do a balance transfer of £1800, and this would only reduce the purchase amount by £500, and therefore would be left paying interest on the remainder. I didn’t know if it automatically clears the oldest amount. 

This was just an unexpected payment, and I didn’t think at the time. But seen the interest now accumulating.

CliveOfIndia

Beech87 said:

I didn’t know if it automatically clears the oldest amount.

It doesn't - payments are always prioritised to the highest-interest portion, not necessarily the oldest.  It's only where you've got, for instance, two balance transfer deals, both running at the same interest rate, that different cards allocate the payments differently.

The main problem you've got is mixing BT and spending.  Once you've got a purchase on the card then the "standard" rule whereby you need to clear the entire balance kicks in (with, as I mentioned previously, a couple of specific exceptions).