NaffWest balance transfers payment allocation

surreysaver

In this day and age, there's no reason why a customer cannot decide for themselves which part of the balance to pay off 

DullGreyGuy

Nasqueron said:

DullGreyGuy said:

grumpy_codger said:

surreysaver said:

DullGreyGuy said:

Nasqueron said:

DullGreyGuy said:

Nasqueron said:

biggerpickle said:

I am in comms so far unsuccessful with NW and wondering if anyone else has had a similar issue.

I opened a new card with a 0% balance transfer ~10 months ago that's reverting to 22.44% in August and then added another BT in Feb at 0% reverting to the same rate in Aug 26. Their ts and cs say payments are first applied to the debt with the highest interest and if all at the same rate then to the oldest debt first. However they're applying payments since Feb to the newer BT and can't tell me why. Any ideas? thank you 

If the new balance is going down and the old balance that ends in August is not going down, I would raise a formal complaint with them about it with the expectation that they keep the August 25 one on 0% for longer and maybe some compensation for this, in the mean time, can you get another BT card to move some of it off so you can clear it down?

Assuming the OP has read the T&Cs correctly they why would NW need to do anything other than move the credits onto the right balance? 

What would the compensation be for? Assuming they do the above then the OP has sustained no losses. 

They have been paying off a debt that ends in August 2026, meaning the balance that is on 0% to August 2025 will start accruing interest in 2 1/2 months or so unless OP takes action to clear that one off. NW could redo the balances but when I had this with M&S they couldn't do that so I had to up my payments to clear the longer date first, then the shorter one. Banks are supposed to allocate payments to the debt that bears interest first / most expensive debt. Compensation is for the sake of it, M&S bunged me £25 as an apology, maybe OP will get more - depends what it costs them to clear the balance early and how much they lose from not having the 0% to August next year.

The regs, last time I read them anyway, stated that they had to pay off the highest statemented interest. There was no regs around them having to look at future interest rates or unstatemented balances per CONC 6.7.4R and the Ombudsman has ruled on previous complaints that they dont need to consider which balance will attract interest first per https://www.financial-ombudsman.org.uk/decision/DRN3900644.pdf 

I think the CONC needs to look at its rules. It's plainly obvious that a 0% rate of interest which expires before another 0% one, is the one that attracts higher interest.

Not obvious to me. It will be - when 0% expires.

Yes, the rules can be changed to be more fair.  But in this case they have to consider bigger variaty of situations, e.g. like 0% switching to 30% in 31 days vs 0% switching to 10% in 30 days. What is more 'fair'?

Plus you dont want to have situations where, like Nationwide, Cash Advance and Purchases currently have the same interest rate, the bank then decides to vary the interest rates and suddenly are seen as retrospectively breaching the rules for having not been crediting payments to a pot that in the future will have higher interest. 

The rules have to have a simplicity that people can understand and not have debates over hence the regs require payments to be credited to the pots based on the current interest rate and lenders stipulate what happens when the pots currently have equal interest... the most common is to pay off the oldest balance. 

Which is the basis for the complaint, the man on the Clapham omnibus would rightly assume that the priority would be the deal that runs out first as that is about to pay interest. Indeed, come August OP might start paying interest unless they change and allocate the payments to the balance that has expired.

And the ombudsman link already posted shows they treat it as the current interest and agreed that the bank was correct in following the T&Cs which say that when different balances have the same interest then the payment is credited to the oldest balance. 

surreysaver said:

In this day and age, there's no reason why a customer cannot decide for themselves which part of the balance to pay off 

Yes, the regulations require it to be paid based on the current interest rate, they had to change the regs a few years ago after there were issues with store accounts and offering people fixed payments on certain purchases within a wider revolving credit account. 

Secondly, there is no off the shelf banking software that does this and so you are talking about bespoke development. My time with a bank each product owner had to pitch for development budget with a business case so they'd need to be able to say they are going to get 10,000 new customer signups because of this feature to give a payback on development in year 2-3.

IT Dev in banks is vastly expensive, to change 1 word on 1 letter was £50k 15 years ago... obviously an intentionally extreme example and changing a few paragraphs would have cost the same, that said turning an expanding table from being horizontal to vertical was £150k and anything that required a change to the underlying core system DB was generally a couple of hundred just for the DB change and release management etc. 

How much a year would you pay in annual fees to have this feature?

Nasqueron

DullGreyGuy said:

Nasqueron said:

DullGreyGuy said:

grumpy_codger said:

surreysaver said:

DullGreyGuy said:

Nasqueron said:

DullGreyGuy said:

Nasqueron said:

biggerpickle said:

I am in comms so far unsuccessful with NW and wondering if anyone else has had a similar issue.

I opened a new card with a 0% balance transfer ~10 months ago that's reverting to 22.44% in August and then added another BT in Feb at 0% reverting to the same rate in Aug 26. Their ts and cs say payments are first applied to the debt with the highest interest and if all at the same rate then to the oldest debt first. However they're applying payments since Feb to the newer BT and can't tell me why. Any ideas? thank you 

If the new balance is going down and the old balance that ends in August is not going down, I would raise a formal complaint with them about it with the expectation that they keep the August 25 one on 0% for longer and maybe some compensation for this, in the mean time, can you get another BT card to move some of it off so you can clear it down?

Assuming the OP has read the T&Cs correctly they why would NW need to do anything other than move the credits onto the right balance? 

What would the compensation be for? Assuming they do the above then the OP has sustained no losses. 

They have been paying off a debt that ends in August 2026, meaning the balance that is on 0% to August 2025 will start accruing interest in 2 1/2 months or so unless OP takes action to clear that one off. NW could redo the balances but when I had this with M&S they couldn't do that so I had to up my payments to clear the longer date first, then the shorter one. Banks are supposed to allocate payments to the debt that bears interest first / most expensive debt. Compensation is for the sake of it, M&S bunged me £25 as an apology, maybe OP will get more - depends what it costs them to clear the balance early and how much they lose from not having the 0% to August next year.

The regs, last time I read them anyway, stated that they had to pay off the highest statemented interest. There was no regs around them having to look at future interest rates or unstatemented balances per CONC 6.7.4R and the Ombudsman has ruled on previous complaints that they dont need to consider which balance will attract interest first per https://www.financial-ombudsman.org.uk/decision/DRN3900644.pdf 

I think the CONC needs to look at its rules. It's plainly obvious that a 0% rate of interest which expires before another 0% one, is the one that attracts higher interest.

Not obvious to me. It will be - when 0% expires.

Yes, the rules can be changed to be more fair.  But in this case they have to consider bigger variaty of situations, e.g. like 0% switching to 30% in 31 days vs 0% switching to 10% in 30 days. What is more 'fair'?

Plus you dont want to have situations where, like Nationwide, Cash Advance and Purchases currently have the same interest rate, the bank then decides to vary the interest rates and suddenly are seen as retrospectively breaching the rules for having not been crediting payments to a pot that in the future will have higher interest. 

The rules have to have a simplicity that people can understand and not have debates over hence the regs require payments to be credited to the pots based on the current interest rate and lenders stipulate what happens when the pots currently have equal interest... the most common is to pay off the oldest balance. 

Which is the basis for the complaint, the man on the Clapham omnibus would rightly assume that the priority would be the deal that runs out first as that is about to pay interest. Indeed, come August OP might start paying interest unless they change and allocate the payments to the balance that has expired.

And the ombudsman link already posted shows they treat it as the current interest and agreed that the bank was correct in following the T&Cs which say that when different balances have the same interest then the payment is credited to the oldest balance. 

Exactly - which NatWest are NOT doing - they are putting it on the newest balance which is the whole problem OP has. No idea why this debate is still ongoing - bank is wrong per your link!!!

biggerpickle

An update - having just got a call back from NW. It's obviously a wider issue as they have a "number of customers" that have 2 bts on accounts where the payments aren't allocating in the correct order. Am pleased I called to query it now as my case is being added to the pile. If it's not resolved by August, they can put an interest waiver on the account for 3 months to buy some more time to sort it. I was hoping I would have cleared the initial bt by the expiry but, well, life happened so am not expecting to have no interest on the account, just not as much I could have been facing.