Balance transfers - the big catch?

[sfag]

I've just discovered, the hard way, what the catch is if I transfer a balance to MBNA's credit card, and its a BIG one.

Over the phone I took out a loan for X amount @ 0% and also transfered a balance for y amount from my wifes card @ 3.9%.
I then used the card to make another €3,000 worth of retail transactions.

I paid €3,000 to the card company at the end of the next month thinking I was paying for the retail transactions but it turns out they allocate any payments to the lower interest amounts before the retails transactions.

So my low interest transfers and loans which were for a fixed period must be paid before I can begin to make a dent on my subsequent retail transactions which attract 18.9%.

To make matters worse the subsequent transactions have no interest free period because as long as the low interest period lasts I technically havent paid off my previous months full amount. It skews everything.

I am SHOCKED. I feel like I have been Mugged. I can not believe they can do this.

They did not explain this practice even though I asked them direct questions about payments. They said it was in my terms when I applied for the card (>5 years ago incidently) except I did not apply - I was given the card when the ACC stopped doing theirs.

I am protesting and they will 'look' into it but can some advise me where I stand and if this is:
(a) standard credit card company practice - as they claim.
(b) Legal and agreed with the Financial regulator.

The only way round the CATCH is that if you transfer balances you cannot use your card again until the end of the low interest period and you have paid off the entire amount.

thanks in advance for any advice.

 

[ClubMan]

The only way round the CATCH is that if you transfer balances you cannot use your card again until the end of the low interest period and you have paid off the entire amount.

I thought that this caveat was pretty well known and applied to most if not all 0%/low interest rate balance transfer CC offers?

As with any financial agreement it makes sense to read the terms & conditions of the CC before making assumptions about how you think things should work.

 

[rkeane]

Demamatory post removed.

Rkeane - you are around Askaboutmoney long enough not to post such stuff

Brendan

 

[liteweight]

Unfortunately its true. I would only use a card with 0% to transfer money to. I never use it for further purchases.

 

[ClubMan]

Its also a rip off.

No it's not if it is stated in the terms & conditions of the card agreement.

 

[CCOVICH]

The only way round the CATCH is that if you transfer balances you cannot use your card again until the end of the low interest period and you have paid off the entire amount.

This is not true in all cases-when I transferred my balance to AIB, I was able to make purchases without incurring interest as any payments I made were first allocated to last month's purchases, and then to the balance transfer.

You could also opt to transfer your balance to a card that offers 0% on both purchases and balances, thereby avoiding any interest during the interest free period.

Most of this, and other things to look out for when using credit cards, is outlined in this Key Post.

FWIW, there was a case recently where someone complained to AIB about the interest they were charged and it was refunded, even though it had been charged in accordance with the ts and cs! If you don't ask........

 

[sfag]

What terms and conditions Clubman?. They offer the loan over the phone. I received no blurb pre or post transaction.
And as I inherited the card from the ACC I never filled in an initial application for the card in the first place.

Surely where one condition negates another it needs to be explained.
In this instance you can't pay your higher interest transactions until you pay your lower ones. That totally negates any benefit of having a low interest period.

Also the usual interest free period on retail transactions is withdrawn by the granting of the low interest period. Thats some sleight of hand if you ask me.

This kind of contract would not stand up for any other consumer purchase. Small terms that render the big claims untenable tend not to be legal.


I can and may transfer everything to another card company but it was a shock to discover this is the way they operate. I've been a good spending customer of theirs and it should strenghen my position for an agreement in my favour.

Do all CC's work in this way.

 

[sfag]

CCOVICH,

I read that post and have learned something I did'nt know about paying off the full amount when the period's up so thanks.

However I still dont think I would have figured out the true ramifications of my loan.

The biggest part of my deal was the loan. It was sold to me as a 'loan'. Except it is applied to my credit card and now appears as a balance transfer. I would never have expected that I could then attract penal interest on all other retail tranactions until the loan is repaid.

Its a pretty big condition for them to keep quiet about and means the interest is never going to be 3.9 it will be 3.9 on part + 18.9 on the rest.

I can't believe it is acceptable to the Financial watchdogs.

 

[rkeane]

No it's not if it is stated in the terms & conditions of the card agreement.

Its a rip off if the credit card companies are selling these cards without actually advising their customer of what is clearly a serious condition of their card. Putting this in small print is a typical tactic at pulling the wool over the customers eyes. If a credit card company is tryign to sell me this card and understands my situation, then in the interest of fairness customers should be told that additional purchases will screw you even more.

 

[CCOVICH]

CCOVICH,

I read that post and have learned something I did'nt know about paying off the full amount when the period's up so thanks.

However I still dont think I would have figured out the true ramifications of my loan.

The biggest part of my deal was the loan. It was sold to me as a 'loan'. Except it is applied to my credit card and now appears as a balance transfer. I would never have expected that I could then attract penal interest on all other retail tranactions until the loan is repaid.

Its a pretty big condition for them to keep quiet about and means the interest is never going to be 3.9 it will be 3.9 on part + 18.9 on the rest.

I can't believe it is acceptable to the Financial watchdogs.

Sorry, I have no knowledge of cc 'loans' and wouldn't use them myself.

If you get their terms and conditions and they are unclear or if they do not allow for the situation you have described, then by all means, inform the Financial Regulator/Ombudsman as you see fit.

But looking at their terms (from the ), it seems pretty clear:

Allocation of Payments:

Items at lower rates of interest on your statement will be paid before items at higher rates of interest

 

[ClubMan]

What terms and conditions Clubman?

Whatever terms & conditions governed whatever agreement you had with the financial institution.

And as I inherited the card from the ACC I never filled in an initial application for the card in the first place.

I find it difficult to believe that you never signed anything in order to get a credit card in the first place.

In this instance you can't pay your higher interest transactions until you pay your lower ones. That totally negates any benefit of having a low interest period.

Not totally - e.g. if you don't make any further transactions until you clear the outstanding transferred 0% interest balance.

Also the usual interest free period on retail transactions is withdrawn by the granting of the low interest period. Thats some sleight of hand if you ask me.

This kind of contract would not stand up for any other consumer purchase. Small terms that render the big claims untenable tend not to be legal.

Have you complained in the first instance to the financial institution and then taken it to IFSRA if dissatisfied? What did they say?

 

[Smi1er]

How is it a rip off? Rkeane... At what point should people accept responsibility for their own actions?

It's plain and simple and clearly pointed out in the T&C's.

If you're going to play the 0% CC game then at least know the rules of that game.

 

[sfag]

I'll say it again. There were no terms and conditions. None in the post and none when I joined 5 years ago. I had an ACC card and it automatically became an MBNA ACC card when ACC sold them their CC business. My card still has the ACC logo in the corner even though it has no conection with the ACC anymore.

The deal was done on the phone with nothing explained and there was no follow up blurb so no terms and conditions there either.

I did directly ask about how I would pay off the subsequent transactions without the low interest balance and was told to make manual payments. I thought the catch would be forgetting to make the manual payment.
To be honest I dont think the sales people are aware of the full ramifications.

I asked MBNA to dig out the telephone conversations as proof of what was said but they said they dont tape all conversations and were unlikely to have them.

If some of you think that way of doing business then you've been swimming with sharks for too long. Would any of you here honestly pull that kind of deal on someone you know in any kind of business. Why can CC companies get away with it and why do financial regulators let them - I think thats the bit I'm baffled about.

I'm going to compalin to the financial ombudsman and IFRSA and I'll keep you posted.

So far the have offered to extend my 3.9% period to six months and dropped the rate on the subsequent transactions to 13.9%. Its another cute move - by extending the low interest period I'll be encouraged to not pay off the higher interest transactions for even longer.

Alternatively I can transfer the whole lot to a 'real' loan with them @ 8.9% - although Gawd knows what the catches are there.

I honestly would not conduct this kind of swiz with anybody - I just would not do it. And hiding behind small print terms and conditions does not excuse it.

My balance are big - I'm talking 16,000 in total. I spend big and can transfer the lot to another card company so they will lose out far more in the log run.

I have always paid the entire amount in full and always avoided penal interest CC charges. I dont even consider I've been slack or caught napping - I simply would never have guessed what was going to happen.

 

[Guest109]

Dick Turpin wore a mask ,the banks don,t need to we walk into it all the time, i always feel like a victim when having dealings with banks ,I once told a bank manager id be better keeping my money under the mattress and maybe let an honest thief rob me, rather than a rogue in a business suit

 

[CCOVICH]

There were no terms and conditions.

As I said above, the terms are clearly outlined on the MBNA website.

If some of you think that way of doing business then you've been swimming with sharks for too long.

I have heard enough about MBNA and their charging structure to be wary of having anything to do with them. Their are plenty of other options, for both credit cards and loans, out there.

Would any of you here honestly pull that kind of deal on someone you know in any kind of business.

It's a bit naive to expect cc compaines to adopt the 'treat others as you would have them treat you' maxim, which is what you seem to be expecting.

Why can CC companies get away with it and why do financial regulators let them - I think thats the bit I'm baffled about.

Why do they get away with it? Because they operate within the law, and their customers put up with it-close your MBNA account tomorrow-refinance the outstanding balance elsewhere-hit them where it hurts-financially.

 

[ClubMan]

Dick Turpin wore a mask ,the banks don,t need to we walk into it all the time, i always feel like a victim when having dealings with banks ,I once told a bank manager id be better keeping my money under the mattress and maybe let an honest thief rob me, rather than a rogue in a business suit

Please take rants to Letting Off Steam.

 

[ClubMan]

I'll say it again. There were no terms and conditions. None in the post and none when I joined 5 years ago. I had an ACC card and it automatically became an MBNA ACC card when ACC sold them their CC business. My card still has the ACC logo in the corner even though it has no conection with the ACC anymore.

Surely you signed something along the way in order to get a card? I can't believe that you never signed any agreement - whatever about reading it.

 

[Smi1er]

I'll say it again. There were no terms and conditions. None in the post and none when I joined 5 years ago. I had an ACC card and it automatically became an MBNA ACC card when ACC sold them their CC business. My card still has the ACC logo in the corner even though it has no conection with the ACC anymore.

The deal was done on the phone with nothing explained and there was no follow up blurb so no terms and conditions there either.

So you signed nothing? What about when you are sent cards? Everytime I get sent a card I also receive T&C's

I did directly ask about how I would pay off the subsequent transactions without the low interest balance and was told to make manual payments. I thought the catch would be forgetting to make the manual payment.

Now I have previously played the BT game, with an average of £25K at any given time. But I knew the rules. It appears you didn't, or choose to ignore them.

I honestly would not conduct this kind of swiz with anybody - I just would not do it. And hiding behind small print terms and conditions does not excuse it.

They aren't hiding behind the smallprint. It's a simple case of that you didn't read the small print.

My balance are big - I'm talking 16,000 in total. I spend big and can transfer the lot to another card company so they will lose out far more in the log run.

£16K isn't big. My average was £25K, the most at anytime was £40K. I knew of someone that had £140K

- I simply would never have guessed what was going to happen.

You didn't have to guess. They told you exactly what they were going to do.

 

[Jockey]

Hi Guys,

Its a well known fact that MBNA have alot of tricks up there sleeves they caught my mother out a few years ago with the same thing. What kind of company sends out blank cheques to its customers?

i have a Tesco credit card myself and i can honestly say i have had no problems with them even though people often complain here about them. It was handy coz i had €1000 limit for the first six months interest free and when the six months were up i transferred the balance to BOSI plastic card which i also have had no probs with. With any financial institution always read the smallprint.

Jockey

 

[AKA]

I mentioned this in another post -
applied for a UB CC availing of 0% balance and purchases transfer

I would have read the initial UB CC application T&C briefly and will revise them. But with the Ulster Bank card I got an additional leaflet - revised T&C which wasn't with the initial applicaiton.

Just wondering if paying interest on new purchases occured before these T&C? I have no intention of using this other card but was wondering how an additional purchase would work.

I would normally pay a credit card bill off all at once - 100% even if was via an overdraft - have a credit card seven years and never missed a full payment...recently did a balance transfer as waiting for SSIA.

I can understand if people don't know every point of T&C as they are quite complex, it could be a long time since they first applied for the card etc.

It took at least 3 wks to process the UB application. In the meantime I missed my first payment - horrified to see level of interest for a month and even more horrified to hear from a friend that if I made a full payment clearing card a few days into the next pay period that I might have to pay a second month's interest on the full amount and not for a few days...will definitely go back to look at the T&C in detail.