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  • FIRST POST
    • MSE Guy
    • By MSE Guy 5th Jan 11, 12:00 PM
    • 1,628Posts
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    MSE Guy
    MSE News: Credit card payment trap ends
    • #1
    • 5th Jan 11, 12:00 PM
    MSE News: Credit card payment trap ends 5th Jan 11 at 12:00 PM
    This is the discussion thread for the following MSE News Story:

    "A major credit card shake-up will be complete this month with all providers set to stop penalising those who spent on their plastic after making a balance transfer ..."

    Read the full story:
    Credit card payment trap ends


Page 1
    • stphnstevey
    • By stphnstevey 6th Jan 11, 8:01 PM
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    stphnstevey
    • #2
    • 6th Jan 11, 8:01 PM
    • #2
    • 6th Jan 11, 8:01 PM
    Does this mean that we won't have to bother with a seperate cards for BT and for spending now?

    If you have a 0% BT and get charged interest on spending, I guess you still will need to ensure that the spending amount is paid off by the end of the month or incur charges (eg £3000 BT and spend £150 in a month, they will only be able to set DD up for minimum payment or full oustanding balance £3150).
    • Consumerist
    • By Consumerist 6th Jan 11, 9:44 PM
    • 5,203 Posts
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    Consumerist
    • #3
    • 6th Jan 11, 9:44 PM
    • #3
    • 6th Jan 11, 9:44 PM
    Does this mean that we won't have to bother with a seperate cards for BT and for spending now?

    If you have a 0% BT and get charged interest on spending, I guess you still will need to ensure that the spending amount is paid off by the end of the month or incur charges (eg £3000 BT and spend £150 in a month, they will only be able to set DD up for minimum payment or full oustanding balance £3150).
    Originally posted by stphnstevey
    Unless you also have 0% on your purchases then you will still be charged interest on your spending unless you pay off your ENTIRE BALANCE (i.e. including the BT). If you want to avoid interest charges completely, you will still need two cards, I think.

    You should check your Ts & Cs to be sure about this but it could be a booby trap for the unwary.
    Last edited by Consumerist; 06-01-2011 at 9:49 PM.
    Warning: In the kingdom of the blind, the one-eyed man is king.
  • izools
    • #4
    • 6th Jan 11, 10:56 PM
    • #4
    • 6th Jan 11, 10:56 PM
    This is correct.

    If a card has said #3150 balance comprising #3000 promotional offer and #150 spending repaying #150 + minimum will still incur interest charges between the date on which the purchases were made and the date on which payment was received - as the entire balance isn't being cleared each month.

    If the goal is to have a 0% balance transfer plus some way to put monthly shop on a credit card which is repaid in full ergo not incurring any interest two cards will still be required.

    The difference is that as a result of the new rules, the purchases will not incur interest in the subsequent month as they will have been paid off.

    Prior to the new rules, the purchases will not have been paid off and will incur interest until such a point the whole promotional rate balance has been cleared.
    • Consumerist
    • By Consumerist 7th Jan 11, 12:26 AM
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    Consumerist
    • #5
    • 7th Jan 11, 12:26 AM
    • #5
    • 7th Jan 11, 12:26 AM
    The difference is that as a result of the new rules, the purchases will not incur interest in the subsequent month as they will have been paid off.
    Originally posted by izools
    If you don't also have a 0%-on-purchases deal on the card then, as far as I know, the interest charged in any statement will only cover the period up to the statement date. If this is the case then there will be an additional interest charge on the following statement to cover the period up to the date of the repayment.
    Warning: In the kingdom of the blind, the one-eyed man is king.
    • stphnstevey
    • By stphnstevey 7th Jan 11, 6:54 AM
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    stphnstevey
    • #6
    • 7th Jan 11, 6:54 AM
    • #6
    • 7th Jan 11, 6:54 AM
    Sorry that doesn't seem right

    The scenario below, if you pay off the £150 which was spending, as long as this is at least the minimum payment or more, then the rate of interest on the remaining ~£3000 would surely be the promotional 0% BT rate?
  • squack
    • #7
    • 7th Jan 11, 7:05 AM
    • #7
    • 7th Jan 11, 7:05 AM
    yes the £3000 is still being charged at the 0% rate, you are just paying the interest relating to the £150
    squaaaaaaaaacccckkkkkk!!!!
    • philzi
    • By philzi 7th Jan 11, 9:40 AM
    • 35 Posts
    • 16 Thanks
    philzi
    • #8
    • 7th Jan 11, 9:40 AM
    • #8
    • 7th Jan 11, 9:40 AM
    In an attempt to understand how long I'll be paying off a credit card under the new rules, I rang them to ask under what basis the total balance was accruing interest, eg:

    £xxx.xx at 0%
    £xxx.xx at 22%
    £xxx.xx at 25 %

    And the answer was............they couldn't tell me as "it's all worked out automatically and we don't have the information available to work it out long hand.."

    Looks like the only way I can do this is by SAR request (which needs doing anyhow)

    phil
    • Consumerist
    • By Consumerist 7th Jan 11, 1:28 PM
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    Consumerist
    • #9
    • 7th Jan 11, 1:28 PM
    • #9
    • 7th Jan 11, 1:28 PM
    A bank must give you this information if you request it. If they refuse, you should put the request in a formal written complaint.

    Edit
    Just to clarify, the bank is not required to do the calculation for you but they are required to give all the information necessary for you to calculate it for yourself; this will include the amounts in each category of interest charged.
    Last edited by Consumerist; 07-01-2011 at 1:34 PM.
    Warning: In the kingdom of the blind, the one-eyed man is king.
    • Sassyone
    • By Sassyone 7th Jan 11, 6:27 PM
    • 6 Posts
    • 1 Thanks
    Sassyone
    I am not sure if this has already been covered on here or not, but I thought I would let you know what happened to me when I used a card that had a balance transfer on it that I am paying off. I thought it would be ok to make a small purchase with it now that they have changed the way that payments are allocated, I assumed there would be no interest charged for this month and I knew it would get paid off when I paid the next installment on the BT when the statement arrived.
    I bought something for £4.68 on 30/11/10 and by the time my statement arrived dated 16/12/10 I had already been charged £1 in interest on it. When I queried it I was told that interest is charged from the day of purchase when there is a balance outstanding.
    I know this was probably put in the small print when the changes were made but I was caught out. At least we know how the card companies are getting their money to make up for losing the interest from the other method of allocating payments.
    As far as I am concerned this means you still can't use a credit card that you have transfered a balance to until it is paid off.
    • Enigma80
    • By Enigma80 9th Jan 11, 9:02 PM
    • 197 Posts
    • 30 Thanks
    Enigma80
    Right I'm a little confused and I think I've probably messed up, but here's what I've done:

    CC1: balance £3000
    CC2: balance £2000

    I've been approved for CC3 (16months 0%) and during application I asked for balance transfer of £2000 from CC2.

    CC2 offered 17 months 0% on BT, so I did a BT from CC1 to CC2 which has gone through now.

    I thought that I would be left with two CC's both with 0% interest for 16months. I'm now under the impression that CC2 won't neccasarily transfer £2000 outstanding balance to CC3? It will just transfer £2000 from the total outstanding amount? I applied for CC3 about a week before BT from CC1 to CC2.

    So basically I'm going to end up paying interest on CC2?

    Have I made a big mistake?
    • zx81
    • By zx81 10th Jan 11, 7:35 AM
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    zx81
    No. Now that the payment hierarchy has flipped, then the more expensive debt will be the one transferred, even if the previous transfer hasn't yet happened.

    A month ago, you might have had a problem though.
    • Enigma80
    • By Enigma80 10th Jan 11, 7:36 AM
    • 197 Posts
    • 30 Thanks
    Enigma80
    If that is the case then that is excellent!
    • stphnstevey
    • By stphnstevey 30th Jan 11, 4:03 PM
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    stphnstevey
    Posted on Stoozing board as well, so either would do for an answer!

    I don't have the brain power to work out what happens if you have promotional rates on BT and spending.

    Say you had 6m 0% spending and 12m 0% BT, you BT say £3K and spent £500 in one month.

    What happens?
    • Consumerist
    • By Consumerist 30th Jan 11, 5:16 PM
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    Consumerist
    For MBNA cards you can look at this post but some cards give overriding precedence to pay down balances which have appeared on a statement as opposed to those which have not. You'll need to refer to the Ts&Cs for the card you use.

    It seems to me that the banks are going to do their best to keep us confused.

    Hope this helps a little.
    Last edited by Consumerist; 30-01-2011 at 5:32 PM.
    Warning: In the kingdom of the blind, the one-eyed man is king.
    • stphnstevey
    • By stphnstevey 30th Jan 11, 5:23 PM
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    stphnstevey
    So, at least while both purchases and BT's are at 0%, you could take the card upto the credit limit - a little extra for stoozers I guess as you normally only BT upto 95% of credit limit.

    But if the durations of the promotions are different lengths, you have to be awake enough to pay off two amounts at two different dates
    • Consumerist
    • By Consumerist 30th Jan 11, 5:40 PM
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    Consumerist
    But if the durations of the promotions are different lengths, you have to be awake enough to pay off two amounts at two different dates
    Originally posted by stphnstevey
    That's about the strength of it. You will need to time the settlement of the purchases balance to be exactly the same date as the promotion expires if you want to avoid interest charges altogether because interest will start to accrue from that date until repaid. If you pay it a day later then you will have one day of interest charges added to your next statement. If you pay it a day earlier then the payment will come off the transfers balance and not settle the purchases balance.

    I think the banks are going to have some real fun with us until we get used to the way it now is.
    Warning: In the kingdom of the blind, the one-eyed man is king.
    • stphnstevey
    • By stphnstevey 30th Jan 11, 7:34 PM
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    stphnstevey
    And I guess it's when the payment arrives there end, not when you send it, so even more difficult
    • Consumerist
    • By Consumerist 30th Jan 11, 10:53 PM
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    Consumerist
    It will be the date the payment is credited to the account that determines which balance is reduced/settled.

    I think, in general, we will need to resign ourselves to having to pay some interest charges when 0%-purchases and 0%-transfers expire at different dates on the same card. . . Unless, that is, Faster Payments can be relied on in some future century.
    Warning: In the kingdom of the blind, the one-eyed man is king.
  • linda16
    My Barclaycard STILL seem to be taking my payments from the cheaper debt before the cash withdrawal (withdrew in an absolute emergency on the way to airport after an expected payment didn't go in my account on time)
    I have written to them a couple of weeks ago to ask why, and not received an answer as yet.
    I assumed ALL my payment would go first to clear the cash debt... Barclaycard are dividing the payment, so much for outstanding balance and so much for cash debt.
    Have I got it wrong?
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