Virgin Money Payment Allocation

savysaver12

Afternoon All, 

Looking for some help, I have a card with a range of payment allocations on it. So a small amount of general payments made, a larger balance transfer that ends in January next year and then an instalment plan that runs for 24 months, this one is new so not even one payment made yet.

I have a lump sum that I want to pay to this card, does anyone know how this will be allocated, i have read some conflicting information online so was looking to see if anyone else had any insight.

Thanks in advance

TheSpectator

It will be allocated per the T&C's of your account. There is no one size fits all answer.

But will say it's almost always a bad idea to mix purchases and balance transfers.

Brie

It is fairly standard that any payment made to a card will be used towards any portion of the balance that accrues the highest interest rate.  But some cards don't make this distinction until after the item is shown on the statement.  

If it's a case of you have a number of 0% BTs or MTs on one card it is standard (in my experience) that a payment will be applied to the portion that was taken out first.  So if you took out a BT on 1 Jan which runs for 12 months and then another on 1 Feb that runs for 3 any payment made will go towards the 1 Jan transaction which will mean that you might got caught out paying a high amount of interest on the 1 Feb one when the 0% period expires after 3 months.  

If you are able to give more details then we might manage more specific information.

CliveOfIndia

Payments will always go to the highest-rate portion of the debt first (as long as the transaction has cleared on your statement).  If you have two promotional rates running at the same APR (2 BTs, for instance), you need to check your T&Cs - some cards will prioritise the one that started first, some will prioritise the one that ends first.

But do be careful if you've got a BT and spending on the same card.  A very small number of cards will "ringfence" the BT portion, so you're OK if you only pay off the spending plus minimum to the BT.  But it's more common for them to charge you interest on the whole lot, as you haven't cleared the balance in full.

savysaver12

thanks for the responses, what happens with the instalment plan do you know?

CliveOfIndia

What do you mean by "Instalment Plan"?  Is this something you've bought from a company and you make a payment to them every month, or is it paying back arrears you owe to the credit card company?  If the latter, this would usually take priority for any payments you make.  If the former, then it'll be treated like an ordinary purchase, so the rule about "Highest APR" would apply.

savysaver12

no on virgin any payment over I think £250 can go on a separate instalment plan and you can pay that over how many months you choose. I think it was around 7% apr as there is a fee with it

CliveOfIndia

savysaver12 said:

no on virgin any payment over I think £250 can go on a separate instalment plan and you can pay that over how many months you choose. I think it was around 7% apr as there is a fee with it

I've just had a look at their website, and must admit it's a new one on me.  I'd hazard a guess that the month's payment due on the instalment plan would come fairly high up in the list of prioritisation, since it appears to be a fixed amount every month that you have to pay or else forfeit the instalment plan option.  How that would fit it to things if you had arrears outstanding I don't know - arrears are usually the top priority.

But in the absence of any arrears, my guess would be payment plan first, then highest-rate debt.  But that is only a guess - you'd need to read your T&Cs to get the definitive answer on that one.

savysaver12

ok thank you for your help i will see if i can find these