Transfering balances

oceanclub

Currently I have a BOI credit card, and plan to get a Halifax credit card which offers a far lower rate of interest (not that I don't pay it off most months anyway). One bonus is that if offers 6 months interest free on all balance transfers. This may sound naive, but I wanted to know exactly how this works.(*)

Say, I currently have €1000 on my BOI card. I transfer this balance to my Halifax card. In the first month, I spend €200 on my card, for a total balance at the end of month of €1200. Do I only then have to pay off the €200 to avoid incurring interest? If I don't pay off that €200, do I then only incur interest on the €200, or (I'm assuming not, but worth checking) on the full €1200?

Also, I'm about to purchase some computer items on my BOI card (hence my interest in balance transfer . If I cancel the card, and have problems with my purchase(s), might I have problems in the event of, saying refunding?

Regards,

P.

(*)For example, for years, I thought that if you paid off part of your monthly balance, you only paid interest on the remainder. Doh.

Padraig Mor

Read the documentation on your new card *extremely* carefully. There should be a list of how payments will be distributed there. It will likely turn out that 'new' purchases are near the bottom of the list and that balance transfers are at the top. i.e. any payments you make will go towards your balance transfer first. Put another way, you would have to clear the entire balance transfer before being able to make purchases 'interest free'.

oceanclub

OK, but to simplify my question a bit, using the above example: as long as I pay off the €200 that I spent in that month, I'm not charged interest on the €1000, until the 6-month interest free period elapses? (Obviously, the "sensible" thing to do is pay off a 1/6th of that €1000 every month.)

Regards,

P.

Padraig Mor

'Fraid not. If you pay €200 into the card they will reduce the balance transfer by €200, i.e. you will then owe €800 of the balance transfer (interest free for the rest of the 6 months) and €200 in purchases (for which you will be paying interest after the first month or so). Only after you have paid €1000 into the card will you get purchases interest free. Note that this is dependent on your card rules being the same as mine - I would imagine it is a standard set up.

calsatron

The majority of lenders work it so that your only interest free on balance transfers.

Therefore if you transfer 1,000 then spend 200 per month and pay back 250. You would have a balance of 750 on the transferred balance and 200 on new purchases. These new purchases would incur interest at the advertised rate.

The general advise on balance transfers is to treat them as loans and not to use the card further until the balance has been paid off.

If your new card has a less favourable rate than the old one then by the time you've paid off the transfer the interest on your subsequent spending could exceed what you'd have paid if you hadn't moved in the first place.

In saying that some card issuers do have interest free offers on transfers and new spending for a fixed period, but I'd clarfiy that carefully with the issuer beforehand.

wyndham

I've seen one of these offers recently,ie 0% on balance transfers for the first 6 months, but there was a 3% "fee" at the outset on the amount being transferred. This was only mentioned in the small print and would equate to an APR of 6%, I think. Not sure if it was the Halifax but it was in the Irish Market and advertised on TV so it may have been.

Read the T&C very carefully and don't do it over the phone.

oceanclub

Padraig Mor wrote:

'Fraid not. If you pay €200 into the card they will reduce the balance transfer by €200, i.e. you will then owe €800 of the balance transfer (interest free for the rest of the 6 months) and €200 in purchases (for which you will be paying interest after the first month or so). Only after you have paid €1000 into the card will you get purchases interest free. Note that this is dependent on your card rules being the same as mine - I would imagine it is a standard set up.

Wow, I must admit this is contrary to what I expected, but then, that's exactly the kind of stunt I imagined a credit card company _would_ pull. Thanks for the info,

P.

oceanclub

Actually, re-reading the Halifax terms and conditions, it's both balance transfers and purchases which are 0% APR for the first 6 months. So, it looks like definitely no interest then.

http://www.halifax.ie/index.jsp?pID=94&nID=106&section=creditcards

P.

Padraig Mor

Wahey - spending spree! Below is the relevant section about the order of payment.

2.4 We use all payments you make to pay off your balance in the following order:
(a) Transactions that appear on your statement, starting with those on which we do not charge interest (for example, any Government stamp duty), then those on which we charge interest at the lowest rate and so on up to the highest rate of interest;
(b) Transactions not yet shown on your statement in the same order as above. In this condition, “Transaction” includes the amount of the Purchase, Cash Advance or Balance Transfer plus any interest, fees or insurance payment charged as a result of that transaction. For example, a Cash Advance fee is included as part of a cash transaction. If a payment is not enough to pay all Transactions charged at a particular rate of interest, we will use the payment firstly to pay off any applicable Government taxes or charges (including stamp duty), the interest, then any fees, insurance and finally the amount of the Purchase, Cash Advance or Balance Transfer within that interest rate band.

CJhaughey

I did this, transferred a large sum from AIB visa to BoS (Halifax)
after the SSIA matured I used the money to clear the Visa thereby saving a small fortune in payments to AIB.
BTW Halifax are still one of the cheapest if not THE cheapest for interest payments ~9.5% or so I think.

oceanclub

Charlie, you always were a smart man for the money.

I rang BOI Visa this morning to enquire about my current APR (16.8%!) and enquire about changing it to 9%. Funnily enough, no reply.

So the plan is (a) buy my computer upgrades, (b) transfer balance, (c) pay it off over 6 months. Score.

P.

Oryx

Ive only speed read this thread so if i missed something, sorry. I transferred my card to halifax and as far as i recall i didnt pay interest at all for six months. And now i pay 9.5%. Beware tho if you dont make the minimum payment on time they have a late payment fee of i think, 7 euro, which is outrageous.

oceanclub

I think all credit companies impose such a fee, so it's not really outrageous (if there was no such fee, noone would bother to pay on time.) In fact, it sounds a lot less than others - MBNA charge £18 I believe!

P.

Oryx

oceanclub wrote:

I think all credit companies impose such a fee, so it's not really outrageous (if there was no such fee, noone would bother to pay on time.) In fact, it sounds a lot less than others - MBNA charge £18 I believe!

P.

I never paid such a fee to BoI or at least not knowingly.

gonker

I transferred my balance to Bank of Scotland from MBNA no interest for 6 months and interest free on new purchases too. Happy days.
Within a week of trying to cancel MBNA credit card they were on to me offering me the same deal that Bank of Scotland were giving me. I told them to shove it haha:D

Cheese Princess

CJhaughey wrote:

I did this, transferred a large sum from AIB visa to BoS (Halifax)
after the SSIA matured I used the money to clear the Visa thereby saving a small fortune in payments to AIB.
BTW Halifax are still one of the cheapest if not THE cheapest for interest payments ~9.5% or so I think.

I just got a Halifax card but they've given me a lower credit limit than the amount I want to transfer from my AIB visa.
When I applied for the card I told them how much I wanted to transfer but they still gave me less. Now I think I have to send them a credit card statement to show my existing limit before they do the transfer. It's taking ages.

Did you have to do that or did they give you the correct limit straight away?

byte

Cheese Princess wrote:

I just got a Halifax card but they've given me a lower credit limit than the amount I want to transfer from my AIB visa.
When I applied for the card I told them how much I wanted to transfer but they still gave me less. Now I think I have to send them a credit card statement to show my existing limit before they do the transfer. It's taking ages.

Did you have to do that or did they give you the correct limit straight away?

I came in here to post the exact same thing! Even though I had sent the most recent AIB Mastercard statement, they still didn't match it, and the limit on the new Halifax card is a quarter of the limit on my AIB mastercard.

I was told that I had to post ANOTHER statement to a Limit-matching department.

It'll be worth the hassle hopefully, due to the lower interest rates.

The only thing I'll miss is the ability to check credit card transactions online, though I was told they were working on it.