Life of balance question

beady1978

Hi everyone
I've just joined, since I've got a question about my M&S credit card. I took it out last year, and got a great deal for balance transfers, 3.9% life of balance. So basically I just transfered another card over onto this, and I've been slowly paying it off ever since. Since it's only 3.9% interest PA, it's not a problem. However, I'm wondering if I spend more money on the card, how will that affect the interest rate for the original balance transfer? Will the remaining balance still get charged interest at 3.9%, or will the new total balance start being charged at whatever the standard rate is? Also, if I were to keep the 3.9% on the original balance, how are the two different interest rates applied? Does one get paid off before the other?

I rang up M&S money to speak to someone, and they seemed to think that the current balance (i.e. from the initial transfer) would keep the original 3.9% even if I spent extra on the card. However, I'm not entirely convinced they knew what I was talking about, hence me writing this question.

Anyway, thanks for reading, and sorry for all the questions. I hope someone can clarify things.

Cheers

YorkshireBoy

The 3.9% LOB rate was for any balances transferred to the card in the first 6 months. Anything transferred to the card after this will be charged at the standard rate (18.9%?).

The golden rule with BT cards (and especially low rate LOB cards such as this) is NOT to spend on the card once you've BT'd to it. This is because your purchases attract the standard rate (18.9%?) after any 0% intro rate has ended and will be the last debt to be repaid. Look at your T&C's/summary box and check out the 'order of payments'.

So long as you don't contravene the T&C's (ie pay late), then the 3.9% rate on your original transfer(s) is fixed for life.

speedbird1973

The balance will you still have will stay at 3.9%
your new spending will be at the standard rate (much more!)

your repayments will pay off the balance transfer NOT the purchase. So you'll be paying a high rate of interest until you've paid the BT off!

don't do it

Bokkens

Hello welcome to MSE,
Yes you are right to be concerned and to double check the information.This is a common question and if you spend on the card you will attract extra interest to your account.
Have a look at the Terms and Conditions for the following.
"Allocation of payments"
This means that you will pay 3.9% on your BT that you move to the card.(you know that)
If you buy a Purchase say £200(petrol,shopping)you will be charge interest on that spend at another higher rate.(check T&C for rate,say 15.9%) .
So on the statement day you pay £100 towards your credit card bill.The allocation of payments in the T&C's means this £100 will go towards the 3.9% BT first leaving the £200 at 15.9% there to keep attracting interest now if you take Five years to pay off the BT the £200 purchase will still be there attracting interest.
So in a couple of words DON'T DO IT.
It is even worse if you take cash from a ATM or a cash transfer as the interest for this is even higher nearer 27%.
If you need to purchase items apply for a 0% purchase card and keep the two types of spending separate.
I hope you understand that ,always keep this in mind when applying for or using cards as you can seriously end up paying more interest than you need to if you spend on the wrong type of card.

Bismarck

Hi, just to reiterate....don't spend on that card!!!

Stick it away in a locked drawer...hide the key (don't swallow it)

JimmyTheWig

Agree with the previous posts.
Don't do it!

You say you transfered the balance from another card. Have you still got this other card? If so, use that one for spending and pay it off in full every month and you won't pay any interest on it.
If you're not going to pay off your new spending every month then, as has been mentioned, you could get a new 0% for purchases card.

*** BUT *** think about this carefully. I presume that you've already got yourself in a bit too deep with credit card spending as you needed to do a LOB transfer. (Appologies if I'm making the wrong assuptions.) If you are not going to be paying off new spending every month you can quickly end up down this route again. Then you will have your LOB transfer on M&S _plus_ a new balance that you can't pay.
If it's something you can pay off every month then credit cards are very useful to have. But if you can't then they can be very dangerous.

beady1978

Thanks everyone for the clarification. What you've said is what I'd feared. It certainly wasn't explained like that when I contacted M&S. The problem is I'm between jobs at the moment (I'm finishing writing my PhD thesis), so I can't really apply for another card, since I've technically got zero income at the moment. I'll be able to handle it in a couple of months, just not now.

Thanks again for the advice.

Milarky

beady1978 wrote: »

Thanks everyone for the clarification. What you've said is what I'd feared. It certainly wasn't explained like that when I contacted M&S. The problem is I'm between jobs at the moment (I'm finishing writing my PhD thesis), so I can't really apply for another card, since I've technically got zero income at the moment. I'll be able to handle it in a couple of months, just not now.

Current account (agreed) overdraft? Anything but use the card from now on. You might consider applying for another card and succeed in being accepted. In that case purchases at 0% for up to 12 months would be beneficial to you and allow you to budget. However it still represents going further into debt - in this 'game' you have to have your exits from time-stamped debts like these all planned...

CannyJock

Anyone else mentioned not to do it?

HSBC 0% purchase card is a good one if you need to buy yourself a few months breathing space.