Credit card question

TNGL · 21 Mar 2020 at 20:03

So I have a new card that has a 18 month interest free balance transfer window.

I have now transferred my balance to that card.

I have now also used this card to make other purchases.

When I repay the monthly amount, how will they allocate this to the balance? As in, I would want to repay for the recent purchase, not the transferred balance with 0%. Will they work it out to be like this?

Or have I shot myself in the foot by also making a purchase on the card?

robfosters · 21 Mar 2020 at 20:04

TNGL said:
So I have a new card that has a 18 month interest free balance transfer window.

I have now transferred my balance to that card.

I have now also used this card to make other purchases.

When I repay the monthly amount, how will they allocate this to the balance? As in, I would want to repay for the recent purchase, not the transferred balance with 0%. Will they work it out to be like this?

Or have I shot myself in the foot by also making a purchase on the card?

I believe they pay interest accruing payments off first.

https://www.nerdwallet.com/blog/credit-cards/how-credit-card-payments-applied/

TNGL · 21 Mar 2020 at 20:55

robfosters said:
I believe they pay interest accruing payments off first.

https://www.nerdwallet.com/blog/credit-cards/how-credit-card-payments-applied/

Thanks, appears to be a US article but I found a UK equivalent - I just didn't know how to word my question.

Scania · 21 Mar 2020 at 20:57

On one of my cards the transfer is 0% anything else lol apr, on another everything is 0% for 24 months, phone them up and ask (which is what I did)

weringo · 21 Mar 2020 at 23:11

The problem with making additional purchases on a 0% card it that interest will be applied to those purchases from day 1 unless you pay off the whole bill in full (which evidently you won't be doing). Interest rates on a credit card are often 20%+ so it's generally not a good idea.

Get a separate card for purchases.

Hellsmk2 · 22 Mar 2020 at 09:39

Yeah you've shot yourself in the foot. I'd be looking at another 0% balance transfer card to move it to.

I wouldn't ever use a balance transfer card for anything other than paying debt down. Have another cc card if you absolutely must, and set it up to pay off the full amount each month that you spend. That way, no new debt, no interest.

If you think that isn't possible, then I'd look at setting up a budget to take back control of your finances. Ynab.com would be a worthwhile investment in that case.

TNGL · 22 Mar 2020 at 09:52

The only reason I put a purchase on this card is that it has a 0% window on purchases for three months too.

Once that period is over, I plan to clear the purchase in full (and with what robfosters mentioned about interest accruing debt being repaid first), that should just leave the balance transfer amount at 0%.

The only reason I use credit cards is because 1) what's better than 0%? 2) To build up my credit score/history.

However, I am beginning to doubt whether 3 months of interest free purchases is worth the potential headache. I'll just give them a call to inquire and read the fine print in a bit more detail.

BDEE · 22 Mar 2020 at 10:15

There is legislation which states that repayments to your card must go towards the most expensive debt first. Your purchase will therefore be allocated your payments until that element has been repaid. If you pay the full amount of that purchase AFTER your bill is produced and that payment is within your interest free window (usually around 56 days for a purchase before interest is applied) then it will not attract interest.