Warning - Egg 0% Anniversary Offer! Interest Charged on Other Purchases Made

stevie1_2

Hi Everyone

This is my first post, so hope this helps some of you.

I have an Egg card that I pay in full every month, except for the balance transfer I made when Egg offered me a 0% Anniversary offer in July, which I wanted to pay off over the life of the offer. Now you can imagine my surprise when I was charged interest on my account for this month!

Even though my previous month's statement balance was supposedly paid in full by direct debit, Egg applied 98% of the payment to the balance transfer, even though the balance transfer had only occured 2 days prior to this payment. The transfer hadn't even taken place yet when the statement for the full amount was issued.

As I only received my statement showing this on the 13 September, and didn't know this previously, I have made purchases this month of £350 on my card, which I intended to pay off in full on the statement date, together with a portion of the transferred balance at 0%. Now Egg tell me that I can't do that, and that 98% of the £350 will be credited against the 0% balance, and that only 2% will go against the interest-earning purchases - What a cheek! They won't let me allocate payments against my various balances.

Talk about an offer that forces you to pay interest should you ever use your card to make purchases after using the 0% offer.

If you don't pay your Egg balances in full every month, and have used the 0% offer, please be careful that you are not paying a fortune in interest on your monthly purchases, as only 2% of all payments are applied to these balances by Egg.

As for me, I have cut up my Egg card, and will never use them again. I am also in the process of transferring all my money out of their e-savings product and into another company's product.

Perhaps this would be a good place for others to let MSE users know of other "great special offers" that aren't so great.

FTD

stevie1 wrote:

Hi Everyone

This is my first post, so hope this helps some of you.

I have an Egg card that I pay in full every month, except for the balance transfer I made when Egg offered me a 0% Anniversary offer in July, which I wanted to pay off over the life of the offer. Now you can imagine my surprise when I was charged interest on my account for this month!

Even though my previous month's statement balance was supposedly paid in full by direct debit, Egg applied 98% of the payment to the balance transfer, even though the balance transfer had only occured 2 days prior to this payment. The transfer hadn't even taken place yet when the statement for the full amount was issued.

As I only received my statement showing this on the 13 September, and didn't know this previously, I have made purchases this month of £350 on my card, which I intended to pay off in full on the statement date, together with a portion of the transferred balance at 0%. Now Egg tell me that I can't do that, and that 98% of the £350 will be credited against the 0% balance, and that only 2% will go against the interest-earning purchases - What a cheek! They won't let me allocate payments against my various balances.

Talk about an offer that forces you to pay interest should you ever use your card to make purchases after using the 0% offer.

If you don't pay your Egg balances in full every month, and have used the 0% offer, please be careful that you are not paying a fortune in interest on your monthly purchases, as only 2% of all payments are applied to these balances by Egg.

As for me, I have cut up my Egg card, and will never use them again. I am also in the process of transferring all my money out of their e-savings product and into another company's product.

Perhaps this would be a good place for others to let MSE users know of other "great special offers" that aren't so great.

This is pretty standard on all credit cards, the rule is, when doing a balance transfer for a promotional rate you must NEVER use the card for purchases. You probably missed this, or misunderstood the T&C's. Put it down to experience as there isn't anything you can do about it unfortunately!

FTD

charlie12

This is one of the Golden Rules when doing credit card balance transfers.

Have a read of Martin's articles for more info (and lots of warnings!)

Don't spend and balance transfer together. There’s a big catch with balance transfers if the special offer interest rate doesn’t apply to purchases (normal spending) as well. In these cases when you make repayments lenders bias them towards paying off the cheap debts first.

This means (expensive) debts from spending sit on the card speedily accruing interest but you can’t start paying them off until the entire cheap balance transfer debt is repaid.

Therefore as a strict rule, Never Ever Ever spend on these cards! Just transfer your balance, put them in a drawer, and use a different card for spending (see best credit card for spending).

grumbler

Egg Loophole - Guaranteed 0% year after year article:

The Catch

Egg knows most people using this offer will have existing debts on the card and/or will use it for spending. The interest rate for either is still 15.9%, as they’re not part of the 0% balance transfer offer.

Yet Egg biases your monthly repayments towards paying the cheap balance transfer debt first. This leaves the expensive debt sitting on the card quickly accruing interest, and you unable to pay it off until you’ve paid off all the cheap balance transfer debt.

This means that though your balance transfer debt is cheap, Egg is effectively making more money off your existing debt to subsidise it.

Best Balance Transfers (cut the cost of existing credit card debts) article:

WARNING. Never, ever, ever, ever spend on a card after balance transferring to it!

All articles: see link in the green bar above.

Clariman

As others have said, it is standard for card issuers to allocate payments against the lowest interest transactions first which means you should never use a BT card for purchases, unless the purchase interest rate is equal to or lower than the BT rate. However, thanks for raising it so that others aware of it too. Although there are some old-hands who know it, it is always worth pointing things like this out for others who may be coming across it for the first time.

Clariman

YorkshireBoy

This is all to do with "allocation of payments", and is covered in the Egg summary box, their T&C's (section 5), and their FAQ section.

Martin has also written an article here...

http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1078703530,72818,

In summary,

1. Ensure your balance is zero (preferably confirmed by a statement) before the 1st of your anniversary month

2. Do (all) your BT's during your anniversary month

3. Do not use the card for anything during months 2-5 of your anniversary period

4. (If possible) settle the Egg balance before the end of month 5 - either by cash or BT'ing off to another card.


EDIT: Note to self - must learn to type faster!!!!

jamesp_3

I'm sorry - i have no sympathy for you. When taking up any sort of offer you MUST read the terms and conditions on your accounts. The Egg card conditions state that:

we will apply the amount you do pay to reduce what you owe us in the following order:
* interest on any Transferred Balances and the Revolving Balance; and

* the remainder of the minimum payment will be divided between the balances stated in Condition 2 and applied to those balances accordingly.

The Egg anniversary offer is a superb offer (i've used it twice now to stooze) but you must read up on these things before doing them. And theres no nead to cut the card up as you will be eligble for the same offer next year when you can use it properly!

Jim

HelenR_3

jamesp wrote:

I'm sorry - i have no sympathy for you. When taking up any sort of offer you MUST read the terms and conditions on your accounts. The Egg card conditions state that:

we will apply the amount you do pay to reduce what you owe us in the following order:
* interest on any Transferred Balances and the Revolving Balance; and

* the remainder of the minimum payment will be divided between the balances stated in Condition 2 and applied to those balances accordingly.

The Egg anniversary offer is a superb offer (i've used it twice now to stooze) but you must read up on these things before doing them. And theres no nead to cut the card up as you will be eligble for the same offer next year when you can use it properly!

Jim

Perhaps he wasnt looking for sympathy ?
just sharing his bad news in the hope of helping others avoid the same fate

stevie1_2

Hi Helen - thanks for the useful post. I really wasn't looking for sympathy. I am in the fortunate position of being able to pay the amount in full and not being badly affected by it. But what about others who think they are getting a bit of a debt breather and only get swept up in further interest payments.

I took my card out 3 years ago, and the 0% offer seemed a fair one when reading the T&C's of the offer. I just didn't think I would have to read all the T&C's every time I use my card, in order to calculate the various scenarios. The 0% offer is meant to be a "thank you" for using their card; but is the most expensive gift you could end up receiving.

If you feel like you're getting a raw deal, then the only way to change that is to vote with your feet. Why will companies ever change the way they rip us off if we never cut up their cards and give custom to companies who treat us more fairly?

Petal_3

Hi there

I have an Egg card - zero balance on it for years now. I only keep it for the anniversary offer.

Woby_Tide

stevie1 wrote:

The 0% offer is meant to be a "thank you" for using their card; but is the most expensive gift you could end up receiving.

If you feel like you're getting a raw deal, then the only way to change that is to vote with your feet. Why will companies ever change the way they rip us off if we never cut up their cards and give custom to companies who treat us more fairly?

Well if all the other card companies started giving out 5 months interest free cash with no transfer fee every year they might get a bit more business, but I'm yet to find anyone else offering something remotely close. I honestly think you've just cut off your nose to spite your face.