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Watch out for this one…
I took out an Amazon credit card via MBNA some months ago. They offered an interest-free balance transfer (subject to the usual small fee) which I made use of. In addition, they run a points system which builds up towards Amazon vouchers based on the amount you spend.
All fine and hunky-dory.
However, I noticed that I was being charged a small amount of interest each month despite paying off all purchases I made on the card as soon as I made them. Three pounds one month, £1.23 the next… that kind of thing.
I rang and the chap on the phone apologised, said he couldn’t work out why this was happening and refunded the money.
Over the next three months, it continued so I rang again. Once more, I checked my purchase/payment procedure with them, clarified the position as regards the outstanding transferred balance, the chap apologised, refunded and all was fine.
Surprise. Three months on and I had another three charges on there – £1.00, £1.21 and £1.00. I’ve just called them *again* to sort it, but this time I’ve been informed differently.
Because I’m making purchases, I have to clear the *entire balance* each month – not just the purchases – otherwise I incur interest. This seems to be the case even if I buy something then immediately go online and make a debit card payment onto the card before it’s appeared on any statement.
However, if I don’t use the card – which is where MBNA make their money! – then I don’t incur interest. This doesn’t make sense to me, as it’s using the card for purchases which nets the issuer a fee from the retailer. With the current scheme they’re encouraging me *not* to use the thing!
In addition, the card promises “up to 50-ish” (sorry, can’t recall the actual amount) of days interest-free on purchases. This obviously isn’t the case as I’m being charged interest on purchases which I’m paying off – at the most – a couple of days after I make them.
Obviously, the solution is to pay off the entire transferred balance first and then start using the card as normal but that’s just not how it was sold to me, nor explained by the first two people on the phone.
At least I know where the charges have been coming from at last, and they have all been refunded to date – though I’m aware there will be *another* pound on next month’s that I’ll have to ring up and contest.
So keep your eyes open, folks, and check those statements!
The Interest on “Interest-Free” balance transfers? by Mosher'sUnimaginativelyEntitledBlog, unless otherwise expressly stated, is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 Unported License.
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I thought that had always been the case?? Money saving Martin has always said never ever ever ever ever to pay on a card you’ve got a balance transfer on. I know they’ve changed the payment heirarchy thing but I still wouldn’t do it for this very reason.
It was something I wasn’t aware of, despite having followed MSE for some time. It does strike me as very strange, especially when you look at the other conditions around it:
1) Interest free balance transfer until a set date
2) Interest free purchases for “up to 50 days” or whatever i.e. as long as you pay them off they don’t incur interest
Yet combine the two “interest free” facilities and you end up in a situation where you generate interest. At a nominal rate, at that – the most was £3.20 or thereabouts and recently it’s been a flat £1. It’s almost like they’re just putting it on for the sake of it.