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    • jennifer_reynolds
    • By jennifer_reynolds 10th May 18, 10:05 PM
    • 1Posts
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    jennifer_reynolds
    Tesco not taking credit card payment in order from highest to lowest interest - is this right?
    • #1
    • 10th May 18, 10:05 PM
    Tesco not taking credit card payment in order from highest to lowest interest - is this right? 10th May 18 at 10:05 PM
    Hello everybody,

    So I have a Tesco credit card with 2,000 transferred balance on it - 0% for another 32 months. Recently I made a purchase on it of 500 then paid it off a few days later - it was the card I had to hand at the time and I always intended to pay it off almost immediately i.e. use it this once like a debit card. Purchases on the card are charged at 1.5% at the moment so I wanted to pay it off straight away to avoid the interest.

    Now I thought that credit card companies legally had to take payment off the highest interest-incurring balance on the card at any given time and therefore the 500 I paid would clear the 500 purchase as that would incur interest as of next statement whereas my transferred balance wouldnt. But it hasn't - 500 has come off the 2,000 balance. So I now have the ludicrous situation where I have an interest-accruing purchase and 500 less on a balance incurring no interest for the next 32 months?!?!?

    I even phoned Tesco a while back when I was thinking about doing something similar before and the guy on the phone assured me that this is indeed how credit cards work i.e. the money comes off the highest interest balance and also (crucial here) that the system is smart enough to know what the highest interest incurring balance is going to be even if the latest statement hasn't been drawn up.

    I've called Tesco now and they've said that no, the system isn't that smart and I should've waited for the next statement to be drawn up before making this payment - is that right? Seems crazy to me, also not what Tesco told me before. Punished for paying off the balance within days rather than waiting for the next statement?

    So can anyone please comment on if a) this is right and b) if I complain to Tesco and ask them to listen back to the last call where I was told this is the case, would they change the payment to come off the purchase rather than the transferred balance? I'm hardly a master criminal seeking advantage here, just someone trying to pay off a purchased item in line with what I was directly told by Tesco in the past?

    Thanks everyone!!
Page 1
    • zagfles
    • By zagfles 10th May 18, 10:16 PM
    • 13,039 Posts
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    zagfles
    • #2
    • 10th May 18, 10:16 PM
    • #2
    • 10th May 18, 10:16 PM
    Yes it is right. They will always allocate payments to statemented balances before unstatemented. The T&Cs should say so somewhere.

    They have to work this way when you think about it. Otherwise, someone intending to pay off the minimum, or full statement balance, could find nothing has been paid off their statement at all if that payment has been allocated to something they haven't yet been billed for!! And they'll end up with missed/late payment charges.
    • Gary_Dexter
    • By Gary_Dexter 10th May 18, 10:17 PM
    • 1,156 Posts
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    Gary_Dexter
    • #3
    • 10th May 18, 10:17 PM
    • #3
    • 10th May 18, 10:17 PM
    Why didn't you wait for the statement to pay the 500?
    • Asghar
    • By Asghar 10th May 18, 10:40 PM
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    Asghar
    • #4
    • 10th May 18, 10:40 PM
    • #4
    • 10th May 18, 10:40 PM
    Basically, you have messed up.


    You should have waited for the next statement which would have shown the 500 purchase. Then when you made the 500 payment it would have come off that amount first because it would have been the highest interest incurring amount.


    Instead you decided to pay the 500 when your lastest statement showed only the 2000 balance transfer, naturally your 500 was deducted from that.


    No point blaming Tesco and no rules have been broken.
    • Westminster
    • By Westminster 11th May 18, 7:09 AM
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    Westminster
    • #5
    • 11th May 18, 7:09 AM
    • #5
    • 11th May 18, 7:09 AM
    As above - you paid the 500 too early.

    Next time wait for the statement.
    Hi. Martin has asked me to tell you I'm a Board Guide on the following boards: Mortgages & Endowments, Mortgage-Free Wannabe, House Buying, Renting & Selling, Small Biz & Charities' MoneySaving and Charities.

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    • Dobbibill
    • By Dobbibill 11th May 18, 7:38 AM
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    Dobbibill
    • #6
    • 11th May 18, 7:38 AM
    • #6
    • 11th May 18, 7:38 AM
    Hi jennifer,

    welcome to the forum.

    Once the 500 had become a statemented balance, the system would then be smart enough to allocate the payment to the right pot so to speak.
    As you paid it so quickly, which I understand why and what your thought process was at the time, it has come off the transaction already shown on the statement.

    Are you able to make a further payment to cover the purchase once it's on your statement to minimise the interest?
    I'm a Board Guide on the Energy, Student Money Saving, UK Armed Forces and
    Local Money Saving - Wales boards. I'm a volunteer to help the boards run smoothly, and I can move and merge posts there.
    Board guides are not moderators and don't read every post. If you spot an abusive or illegal post then please report it to forumteam@moneysavingexpert.com. Any views are mine and not the official line of MoneySavingExpert.com.


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    • molerat
    • By molerat 11th May 18, 8:22 AM
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    molerat
    • #7
    • 11th May 18, 8:22 AM
    • #7
    • 11th May 18, 8:22 AM
    2.1
    When you pay us we use it to pay off first those items which attract the highest interest rates. If there is more than one item at the same rate we pay off the item at the rate which ends first (for example if you have 0% on purchases for 12 months and 0% on balance transfers for 9 months, we'll pay off your balance transfer first). We always use your payments to pay off items which have appeared on a statement you have received before paying off items which haven't yet appeared on your statement.
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    • Chippi
    • By Chippi 11th May 18, 9:10 AM
    • 9 Posts
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    Chippi
    • #8
    • 11th May 18, 9:10 AM
    • #8
    • 11th May 18, 9:10 AM
    They will always allocate payments to statemented balances before unstatemented. The T&Cs should say so somewhere.
    Originally posted by zagfles
    By waiting for the statemented purchase, the purchase will incur interest since the account is on minimum payments. Correct?

    So purchase interest is unavoidable when making a purchase on a credit card with transferred balance(s) and minimum payments?
    • shortcrust
    • By shortcrust 11th May 18, 9:16 AM
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    shortcrust
    • #9
    • 11th May 18, 9:16 AM
    • #9
    • 11th May 18, 9:16 AM
    By waiting for the statemented purchase, the purchase will incur interest since the account is on minimum payments. Correct?

    So purchase interest is unavoidable when making a purchase on a credit card with transferred balance(s) and minimum payments?
    Originally posted by Chippi
    Yep. That's why most people transfer the balance and stick the card in a draw, cut it up etc.
    • redux
    • By redux 11th May 18, 9:26 AM
    • 18,115 Posts
    • 23,911 Thanks
    redux
    By waiting for the statemented purchase, the purchase will incur interest since the account is on minimum payments. Correct?

    So purchase interest is unavoidable when making a purchase on a credit card with transferred balance(s) and minimum payments?
    Originally posted by Chippi
    Yes. In this circumstance it's good to make payment the day after the statement date, rather than wait until the defined due date. It will also be good to clear the spending balance as soon as possible, rather than trickle along on minimum payments.

    Some people would do no spending at all on such a card, as mentioned above, but I reckon another approach is a modest spend of about the same as the minimum monthly payment can keep the benefit of the balance transfer for longer, and cost only a few pence interest per month.
    • chattychappy
    • By chattychappy 11th May 18, 9:56 AM
    • 6,765 Posts
    • 3,662 Thanks
    chattychappy
    Well, I'm sympathetic to the OP, but it is a tricky one given the T+Cs.

    There was a lot of publicity about the "negative payment hierarchy" being outlawed and that payments received would have to knock down higher interest bearing balances first. Easy to overlook the statemented/unstatemented rule.

    Incidentally, the T+Cs quoted by Molerat are hardly worded in the best way - giving two contradictory statements and mentioning the bit about statemented/unstatemented at the end, when this is the first thing they consider when allocating payments. (I have seen better versions on other cards.) The Lending Code isn't much better: "Subscribers will apply customers' repayments to the most expensive parts of the credit card balance first. This means that repayments will be applied to the various elements within the balance ranked by order of their annual interest rate (not APR) on a pure high to low basis. In allocating customer repayments, subscribers will apply them to, at least, statemented transactions. " with a usage of "at least" which I find a bit strange.

    Anyway, despite the above, I think it's clear enough. Posters have criticised the OP for overlooking this, but she did the sensible thing and asked Tesco:

    I even phoned Tesco a while back when I was thinking about doing something similar before and the guy on the phone assured me that this is indeed how credit cards work i.e. the money comes off the highest interest balance and also (crucial here) that the system is smart enough to know what the highest interest incurring balance is going to be even if the latest statement hasn't been drawn up.
    Originally posted by jennifer_reynolds
    On this basis, the OP does have a complaint. She rang up to clarify how the allocation worked, relied on what she was told, and suffered a detriment as a result. Seems Tesco's operator "overlooked" the rule too. Staff need to be trained better and if not, then Tesco have to cover the loss to the customer that results.
    • zagfles
    • By zagfles 11th May 18, 10:43 PM
    • 13,039 Posts
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    zagfles
    On this basis, the OP does have a complaint. She rang up to clarify how the allocation worked, relied on what she was told, and suffered a detriment as a result. Seems Tesco's operator "overlooked" the rule too. Staff need to be trained better and if not, then Tesco have to cover the loss to the customer that results.
    Originally posted by chattychappy
    I would wager that the vast majority of bank call centre staff don't understand how allocation of payments work. IME they get far simpler questions wrong.
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