Paying Interest on Cash Withdrawl on 0% CC
chocolatelover93
Posts: 1,033
Forumite
in Credit cards
Hello!
I'm kinda new to credit cards and have got a 0% balance transfer card with Halifax to clear my old credit card.
I recently had to draw £900 off my credit card to pay for a car. I didn't realize this would mean I would have to pay interest on it (yes I'm stupid for not realizing or reading this). So I am currently paying interest on £900 but I have £2900 on the card. How do they work out when I have finished paying off the £900? Is it the first £900 off or the last or a percentage?
TIA
C xx
I'm kinda new to credit cards and have got a 0% balance transfer card with Halifax to clear my old credit card.
I recently had to draw £900 off my credit card to pay for a car. I didn't realize this would mean I would have to pay interest on it (yes I'm stupid for not realizing or reading this). So I am currently paying interest on £900 but I have £2900 on the card. How do they work out when I have finished paying off the £900? Is it the first £900 off or the last or a percentage?
TIA
C xx
Read my diaryHere
0
Comments
-
The order of payments will be specified on your statement, but typically the part of the balance that attracts the highest interest rate will be repaid first. There are some card providers (e.g. MBNA) that do things a little differently, but in this case I think it's clear.
So in essence, the first £900 you pay off the card will go towards clearing the cash advance (plus interest), with the 0% balance transfer remaining untouched.0 -
The order of payments will be specified on your statement, but typically the part of the balance that attracts the highest interest rate will be repaid first. There are some card providers (e.g. MBNA) that do things a little differently, but in this case I think it's clear.
So in essence, the first £900 you pay off the card will go towards clearing the cash advance (plus interest), with the 0% balance transfer remaining untouched.
Thank you!!!Read my diaryHere0 -
chocolatelover93 wrote: ».....I recently had to draw £900 off my credit card to pay for a car. I didn't realize this would mean I would have to pay interest on it (yes I'm stupid for not realizing or reading this). So I am currently paying interest on £900 but I have £2900 on the card. How do they work out when I have finished paying off the £900? Is it the first £900 off or the last or a percentage?.....
Can I ask you one question? (okay, two questions). Was the balance transfer transaction(s) already 'statemented' (by that I mean appeared on a statement) when you did the cash withdrawal? If, yes, then any payments you make now will go towards paying that off. Once you clear that only then will you start paying off the cash transactions (£900). I've seen some posts, where customer thinks she is paying off the cash transaction balance, but all they've been doing is paying off a statemented (purchases/balance transfer) balance, and all the while their cash transactions had been charged interest.
If you had £0 statement balance, then you do cash transaction and balance transfer within the same statement month, any payments you make afterwards will go towards clearing the cash transactions (because it earns interest at a higher rate).The order of payments will be specified on your statement, but typically the part of the balance that attracts the highest interest rate will be repaid first. There are some card providers (e.g. MBNA) that do things a little differently, but in this case I think it's clear.
So in essence, the first £900 you pay off the card will go towards clearing the cash advance (plus interest), with the 0% balance transfer remaining untouched.
Not always, depends if there is a statemented balance.0 -
Simplest thing to do is WAIT FOR CASH WITHDRAWAL TO BE STATEMENTED, then pay it off immediately (don't wait for the due-by date).
Given your "realisation", sounds like it already has!0 -
OceanSound wrote: »
Can I ask you one question? (okay, two questions). Was the balance transfer transaction(s) already 'statemented' (by that I mean appeared on a statement) when you did the cash withdrawal? If, yes, then any payments you make now will go towards paying that off. Once you clear that only then will you start paying off the cash transactions (£900). I've seen some posts, where customer thinks she is paying off the cash transaction balance, but all they've been doing is paying off a statemented (purchases/balance transfer) balance, and all the while their cash transactions had been charged interest.
If you had £0 statement balance, then you do cash transaction and balance transfer within the same statement month, any payments you make afterwards will go towards clearing the cash transactions (because it earns interest at a higher rate).
.
The balance transfer happened in May/June time when I got the card and I drew the cash out in Sept
C xRead my diaryHere0 -
chocolatelover93 wrote: »The balance transfer happened in May/June time when I got the card and I drew the cash out in Sept
C x
One way to confirm. Look in your latest statement. There should be a page titled 'summary box' (I assume all halifax credit card statements have the same layout). There you have section called 'allocation of payments'. Look for this:We will reduce the amount you owe in the following order:
· any overdue amounts from previous statements;then
· the remaining balance on your statement;then
· any recent transactions not yet shown on your statement.
If not, the only other way is to make a payment then wait for the next statement, where there will be 'breakdown of balance' by 'balance type'. I always felt that we shouldn't have to wait for the statment to arrive to see this, it should be avaialble through online/telephone banking.
Anyway, if your latest statement says 'any overdue amounts from previous statements', your cash withdrawals will be incurring interest until you pay both the balance transfer amount and cash withdrawal amount.0 -
chattychappy wrote: »Simplest thing to do is WAIT FOR CASH WITHDRAWAL TO BE STATEMENTED, then pay it off immediately (don't wait for the due-by date).
Given your "realisation", sounds like it already has!
To clarify - the advice is to wait until the cash withdrawal transaction is actually applied to the account. This means going online/using your app to verify that the cash transaction is no longer a pending transaction and has been applied to the account.
If you pay as soon as the transaction moves from pending to appearing on the recent transaction, you'll only pay pennies in interest.
PochiSoldi0 -
Thank you everyone I have checked my latest statement and it says that the highest interest will be paid off first
CxRead my diaryHere0 -
chocolatelover93 wrote: »Thank you everyone I have checked my latest statement and it says that the highest interest will be paid off first
Cx0 -
OceanSound wrote: »Just out of interest (sorry!, I'll get my coat shall I), how much will you pay? (take it your balance is £3800?, or is it £2900 combined for both balance transfer + cash withdrawals?)
Balance was £3326 with the £900 cash and next month they are saying I will pay around £15 interest but I am paying £50 off a week so will be less than that. I've paid off £410 since last statement.
xRead my diaryHere0
This discussion has been closed.
Categories
- All Categories
- 342.5K Banking & Borrowing
- 249.9K Reduce Debt & Boost Income
- 449.4K Spending & Discounts
- 234.6K Work, Benefits & Business
- 607.1K Mortgages, Homes & Bills
- 172.8K Life & Family
- 247.4K Travel & Transport
- 1.5M Hobbies & Leisure
- 15.8K Discuss & Feedback
- 15.1K Coronavirus Support Boards