0% balance transfer credit cards

[dougal]

My brother is looking to transfer money onto a New credit card offering 0% on balance transfers. If he does that and then uses the card to purchase other items will that negate the 0% or will interest only accrue on the purchases?

[moogsy]

Interest would only accrue on the purchases as far as I'm aware, I've just done a similar thing. Most companies will charge a small one off fee though, mines was 2.5% of the balance amount.

[Paolo]

Interest would only accrue on the purchases as far as I'm aware, I've just done a similar thing. Most companies will charge a small one off fee though, mines was 2.5% of the balance amount.

Yes that is correct. The Government also brought in legislation so that any payment made is allocated to the part with the highest interest. The companies use to assign it to the lowest.

[dougal]

Thanks for the replies.

[The Comedian]

The answer is yes it will negate the 0% on the balance transfer.

 

How long is your 0% on purchases? It's around 3 months usually on a balance transfer card.

 

Put simply if you transfer say ?5000 onto a card and purchase say ?1000, outwith the 0% on purchases which will run out first on these, you would need to repay the FULL 6K to avoid interest. That's because you have to clear your balance in full every month to avoid paying any.

 

My advice would be to never use a balance transfer card for purchases.

[The White Cockade]

if you do a balance transfer to a card that say has 0% for 12 months on transfers then you don't pay any interest

on the transferred amount irrespective of any purchases for those 12 months

[The Comedian]

if you do a balance transfer to a card that say has 0% for 12 months on transfers then you don't pay any interest

on the transferred amount irrespective of any purchases for those 12 months

 

That's not true. You need to have 0% on purchases also for that to be the case. With these cards you get something like 22 months for the transfer and 3 months for purchases. Folk get stitched up with this.

 

I dealt with a guy who transferred 10k. Four months later he bought ?50 worth of fuel. When his bill came along as with any card with no 0% left on purchases you need to clear the balance to avoid interest. He couldn't, this voided the 0% on the balance he transferred to begin with and he had to pay interest on it until it was cleared. Probably cost him thousands.

[IronJambo]

That's not true. You need to have 0% on purchases also for that to be the case. With these cards you get something like 22 months for the transfer and 3 months for purchases. Folk get stitched up with this.

 

I dealt with a guy who transferred 10k. Four months later he bought ?50 worth of fuel. When his bill came along as with any card with no 0% left on purchases you need to clear the balance to avoid interest. He couldn't, this voided the 0% on the balance he transferred to begin with and he had to pay interest on it until it was cleared. Probably cost him thousands.

 

See post 3.

 

I assume this was a while ago? If he done that today and he paid the ?50 or more into the account when his bill came in he'd still have zero interest as your payment goes towards the part of your bill that has the highest interest.

 

Personally I sometimes move money around with zero % cards and I just put the card for the account in a drawer until the interest free period is over and then move it to another account. Can't go wrong that way.

[The Comedian]

See post 3.

 

I assume this was a while ago? If he done that today and he paid the ?50 or more into the account when his bill came in he'd still have zero interest as your payment goes towards the part of your bill that has the highest interest.

Personally I sometimes move money around with zero % cards and I just put the card for the account in a drawer until the interest free period is over and then move it to another account. Can't go wrong that way.

 

Post 3 doesn't include the full story. On a mixture of balances not all of your payment goes on the one with the highest interest. Of a ?50 payment most of it goes towards the one that cost's you the most interest, a fraction will go to the next least, another fraction on the next etc. You won't actually clear it. People think they've spent ?50 notes I'll clear ?50 notes but it doesn't work like that.

 

If you aren't having that nip out and buy a packet of smarties with your card and see what happens

 

The bit in bold is the smart way to do it. Win win for you, free borrowing.

[IronJambo]

Post 3 doesn't include the full story. On a mixture of balances not all of your payment goes on the one with the highest interest. Of a ?50 payment most of it goes towards the one that cost's you the most interest, a fraction will go to the next least, another fraction on the next etc. You won't actually clear it. People think they've spent ?50 notes I'll clear ?50 notes but it doesn't work like that.

 

If you aren't having that nip out and buy a packet of smarties with your card and see what happens

 

The bit in bold is the smart way to do it. Win win for you, free borrowing.

 

I'm not sure that's the case at all but I'm not going to argue, I certainly won't put it to the test. For what it's worth though, my wife had one with barclaycard and I took a fit of despair when she told me she'd went shopping with it. We continued to pay it as normal with no repercussions with interest on the original outstanding balance. We do tend to pay off our monthly spending on cards. There's a good possibility some lenders take the rules to the limit and others are more lenient. I've got a couple of interest free's on the go and they're safely tucked away, I've no need to go spending on them

[Paolo]

I'm not sure that's the case at all but I'm not going to argue, I certainly won't put it to the test. For what it's worth though, my wife had one with barclaycard and I took a fit of despair when she told me she'd went shopping with it. We continued to pay it as normal with no repercussions with interest on the original outstanding balance. We do tend to pay off our monthly spending on cards. There's a good possibility some lenders take the rules to the limit and others are more lenient. I've got a couple of interest free's on the go and they're safely tucked away, I've no need to go spending on them

It is not. Legislation now dictates the payments are allocated in order of interest rate, with the highest first. Of that I am certain.

[Norm]

If you have one amount on 0% and another with interest being charged, certainly Lloyds, HBOS and Sainsbury's require the full balance to be cleared every month to avoid interest.

 

For example, should you have a have a balance transfer amount on 0% but a purchase amount on 17%, both the balance transfer and purchases would need to be paid in full to avoid interest. However, interest would only be charged on the purchases you made, not on the BT amount.

[Dazo]

1343109373[/url]' post='3057940']

If you have one amount on 0% and another with interest being charged, certainly Lloyds, HBOS and Sainsbury's require the full balance to be cleared every month to avoid interest.

 

For example, should you have a have a balance transfer amount on 0% but a purchase amount on 17%, both the balance transfer and purchases would need to be paid in full to avoid interest. However, interest would only be charged on the purchases you made, not on the BT amount.

 

The point being you would only pay interest on the ?50 spend ather than the full balance amount. ?50 would be pretty easy to clear.

[Norm]

The point being you would only pay interest on the ?50 spend ather than the full balance amount. ?50 would be pretty easy to clear.

 

Correct

[dougal]

Looks like the best thing for my brother to do would transfer the balance onto a new 0% card and then not use it until the balance has been paid off, just in case.

[jack D and coke]

The answer is yes it will negate the 0% on the balance transfer.

 

How long is your 0% on purchases? It's around 3 months usually on a balance transfer card.

 

Put simply if you transfer say ?5000 onto a card and purchase say ?1000, outwith the 0% on purchases which will run out first on these, you would need to repay the FULL 6K to avoid interest. That's because you have to clear your balance in full every month to avoid paying any.

 

My advice would be to never use a balance transfer card for purchases.

Just what i was going to post. I have two CC's, one which i transfered a balance to so as to pay no interest and another if i want to buy anything. I always use a CC for anything i buy on the internet.