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How payments are applied...

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bee12345
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How payments are applied...

#106885

Postby bee12345 » December 30th, 2017, 11:18 pm

Hi all,

I find myself in need of some cash for 6 months or so, and am wondering whether to use the 0% money transfer offer on my Barclaycard. I know that a number of years ago, when I last had to do this, it was completely bonkers to use a card for a money/balance transfer, if that card was being used for purchases too, because of the order in which payments were applied. However, I understand that payments are applied differently now.

All our day to day spending goes on this Barclaycard, and it is paid off in full by direct debit every month. If I borrow some of the spare credit limit on the card, and then manually pay off the day to day spending in full the following month, plus an amount towards paying off the money transfer, will it work as I expect?

E.g. in January, day to day spend £1500 and borrow (money transfer) £4000.
In February, day to day spend £1200.
At the end of February (on or before the due date), pay off January's £1500 plus £500 of the £4000.
In March, day to day spend £1400
At the end of March, pay off February's £1200 plus £500 of the remaining £3500
Etc...

If I do as suggested above, will I avoid paying any interest, or doesn't it work like that? I understand that if I miss payment dates, it'll all go wrong, so please assume that I'm highly organised in that respect.

Thanks in advance for any replies.

Cheers,
Bee

DrBunsenHoneydew
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Re: How payments are applied...

#106924

Postby DrBunsenHoneydew » December 31st, 2017, 9:51 am

That sounds correct.

From their FAQs: If you do not pay the total outstanding balance in full by the payment due date, we'll apply the amount you do pay to reduce higher interest rates balances before lower interest rate balances. This usually means that you will pay off any cash transactions and purchases before you pay off any of your balance transfer.

swill453
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Re: How payments are applied...

#106926

Postby swill453 » December 31st, 2017, 10:01 am

You may not avoid paying interest though. Your day-to-day transactions are only interest-free if you clear the balance, which you won't be doing.

So you'll probably be charged interest on your day-to-day transactions up to the point you pay the bill.

Scott.

GoSeigen
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Re: How payments are applied...

#106957

Postby GoSeigen » December 31st, 2017, 12:14 pm

swill453 wrote:You may not avoid paying interest though. Your day-to-day transactions are only interest-free if you clear the balance, which you won't be doing.

So you'll probably be charged interest on your day-to-day transactions up to the point you pay the bill.

Scott.


Scott is right. Unless you pay your bill in full you will NOT benefit from the up-to-6-week interest-free period on purchases but will be charged the usual rate of interest between purchase date and your payment date.


Much better to get a separate card for purchases if you can do so.

GS

bee12345
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Re: How payments are applied...

#106985

Postby bee12345 » December 31st, 2017, 1:58 pm

Thank you everyone. I suspected there might be an issue - just couldn't work out what it would be. I'll use a different card!

Happy New Year!

Bee


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