Are there any downsides?

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radoslaff
radoslaff Posts: 168 Forumite
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in Stoozing: free cash from credit cards
Hi, I have a BT Barclaycard with a balance about £1300.00, a DD to pay £40.00 a month and about 18 months left on the 0% offer. I was thinking that if I spend just under £40.00 a month on this card then the whole DD will go towards covering the spent because it is the interest incurring part of the balance. In this case the balance will remain relatively constant for the next 18 months when I'll either have to move it somewhere else or pay it in full. The overall balance of my CCs is not big at all so this won't hurt me in that aspect. Are there any downsides in doing this that I haven't thought of yet? I'm pretty much sure that such questions have been answered over the years so if someone feels uneasy of me asking again, please accept my apologies.
The journey of a thousand miles begins with one step.

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  • [Deleted User]
    [Deleted User] Posts: 35,242 Forumite
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    The downside is that you will pay interest on the £40 spend each month, though you will protect the larger 0% BT.
  • radoslaff
    radoslaff Posts: 168 Forumite
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    Deleted_User wrote: »
    The downside is that you will pay interest on the £40 spend each month, though you will protect the larger 0% BT.


    OK, maybe I haven't thought it through but isn't it right that if I spend £40.00 and then pay it by the due date then I don't pay any interest? Just like I do with my other CCs.
    The journey of a thousand miles begins with one step.
  • [Deleted User]
    [Deleted User] Posts: 35,242 Forumite
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    edited 5 November 2018 at 4:40PM
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    No, because you won't be clearing the whole balance, which includes the BT amount.

    Unless Bcard have changed their payment rules?

    Edit - yes, they have. You now only need to clear the interest bearing balance. In which case, you're fine to do as you suggest.

    http://help.barclaycard.co.uk/brochure/spending_transactions/promotional-standard-rate
  • Anthorn
    Anthorn Posts: 4,362 Forumite
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    The other downside is that if you pay more interest than you pay off the debt over 18 months you will be designated as in Persistent Debt. If you can clear the debt or transfer it that in itself is pretty much meaningless. But if you can't clear the debt you will enter the second 18 months period during which your lender will request that you pay an increased amount to clear the debt quicker.

    The major problem as I see it is that Persistent Debt is a result of a new rule by the FCA and the effect on the credit history is unclear at this time.
  • radoslaff
    radoslaff Posts: 168 Forumite
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    Well, that's a huge downside than. :)
    Still, I'll be covering the full amount of the interest incurring bit of the balance and according to the T&Cs my payments will be allocated towards the spend. You mean that despite this they will still charge me interest for the time between the purchase and the DD? This sounds a bit odd, like a cash advance. I don't say you are not right, zx81, I just want to understand it.
    The journey of a thousand miles begins with one step.
  • radoslaff
    radoslaff Posts: 168 Forumite
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    Anthorn wrote: »
    The other downside is that if you pay more interest than you pay off the debt over 18 months you will be designated as in Persistent Debt. If you can clear the debt or transfer it that in itself is pretty much meaningless. But if you can't clear the debt you will enter the second 18 months period during which your lender will request that you pay an increased amount to clear the debt quicker.

    The major problem as I see it is that Persistent Debt is a result of a new rule by the FCA and the effect on the credit history is unclear at this time.


    Well, I would do anything like that only if I don't have to pay interest, otherwise it's at least meaningless if not harmful. I can pay it off any time, I just don't want to.
    The journey of a thousand miles begins with one step.
  • nic_c
    nic_c Posts: 2,928 Forumite
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    edited 6 November 2018 at 10:19AM
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    For many providers the 56 day rule only applies if the balance is cleared, not just the amount spent - though the link zx81 provides seems to indicate the 56 day rule is allowed with a promotional balance as long as any balance excluding the promotional rate is paid in full by the due date.

    So if you are spending £40 each month, then are you diverting the spare £40 you would have used for the spend into a savings account? If not don't see the benefit other than being able to spend £40 more and knowing you are utilising a lot of the 0%. It does seem a lot of effort to go for a principle if you are talking £40pm.

    (edit - additional) regarding the persistent debt IIRC it does not apply to accounts with promotional balances, it's not about whether just the minimum is paid but how much interest is paid over the 18 months i.e. just paying minimum and carrying over interest bearing balances.
  • faddy
    faddy Posts: 508 Forumite
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    Deleted_User wrote: »
    No, because you won't be clearing the whole balance, which includes the BT amount.

    Unless Bcard have changed their payment rules?

    Edit - yes, they have. You now only need to clear the interest bearing balance. In which case, you're fine to do as you suggest.

    http://help.barclaycard.co.uk/brochure/spending_transactions/promotional-standard-rate
    I know this is how Nationwide cards operate. Are there any others?
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