Barclaycard say that you can xfer a balance from another card, and this balance will be charged at 0% for as long as it exists.
Moreover - if you do this, you will get 2% cashback on purchases as long as this balance remains from one month to the next.
This looks to be too good to be true. Free loan that need never be repaid, plus 2% cashback on purchases.
Is the balance xfer separate from any balance on purchases? I normally pay off my visa balance in full every month.
Their explanation is given in the link below - in not sufficient detail for my liking - looks like there's a financial trap lurking here to me. If anyone can explain the offer in terms that make sense, I'd be grateful!
Read the T&C! The 0% balance transfer applies for the life of the balance subject to a minimum spend of 50 per month on the card, or it reverts to
6.9%.
Given that any payments you then make to Barclaycard will be made towards the balance transfer first, the 50 spent will then accrue interest at the normal Barclaycard rate. You cannot choose to pay off the monies spent rather than the transferred balance! (section 5.5 of T&C).
Hence you can transfer your balance at 0% but will be obliged to pay interest on the monies spent required to earn you that 0% rate.
) says 2% cashback as long as a balance is carried forward (until Dec 2004), and 0% on transferred balances for as long as it takes to pay them off. Yet on
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it is stated that "we will always charge interest on balance transfers" In the terms and conditions (
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) 5.5 - amount paid will be applied in the following order: "Against any transfer balances and promotional balances WHICH AN INTEREST RATE APPLIES TO {my emphasis} for an open ended period". I have therefore written to Barclaycard asking them to clarify these inconsistencies.
So would it be fair to say that this is an "interest free" loan which is totally dependant on the buyer taking on a minimum £50 a month interesting bearing loan ? It sounds complicated and as the previous poster said "convoluted", to the point that it might be construed as misleading advertisting.
Well, yes re the first half. Re the second half, no I don't think so - the transferred balance is at 0% subject to the 50 spend yadayadayada. Pretty clear really! From a business perspective totally sensible as well - it attracts customers to either open a new account or for existing customers to bring all their balances to Barclaycard but still ensures a profit stream by their doing so.
What is the point of encouraging a 0% balance transfer only for the transferred balance to be moved on again once an introductory period has expired?!
But I suspect that Barclaycard may change their minds about how good an idea this is once the complaints start coming in and then going to the Financial Ombudsman and the FSA.
Yes, but I suspect that the £50 spend stuff is nowhere in the advertising, its generally in the small print. If for the sake of argument we say the card has 12% flat rate a year, it might also be argued that the balance transfer costs 50p for the first month, (1% of £50), £1 for the second month (1% £100) etc. Ok not big amounts, but as it is impossible to have the balance transfer without paying interest, it is a play with words, or rather a play with money, determining which bits of which money are causing the interest to be accrued. it is not an interest free balance transfer, the customer HAS to pay interest.
For example it is equivalent to Acme bank announcing it was offering a £10,000 interest free loan over 2 years, and then in the small print find that it is on condition of taking out a £20,000 and paying 10% interest on the first £10,000, and getting the second £10,000 "interest free", with all repayments subtracting from the "free" £10,000 first. It is purely a play on words. I don't think it would have a snowballs chance in hell of getting passed the ASA (or Watchdog) if it was headlined as a £10,000 interest free loan.
Traditionally, the arguement for really free balance transfers was that either the punter didnt realise the free period was up and thus paid big interest for a couple of months, or the punter couldn't be bothered moving again, and thus they (the cc company) had a new customer.
The important part, i.e. the fact that none of your subsequent repayments are used to pay off your spending until your transferred balance is paid off is not mentioned on that page. you have to click on the T&C and scroll down through approximately 300 lines of text to terms and conditions chapter 5.5 before you are informed that your repayments will not be used to pay of any spending that you make until your balance transfer is completely paid off.
you sign the terms and conditions to state that you have "read and understood" them
if you don't read them then what happens to you is your own fault.... the credit card companies have to have these t&cs as per the consumer credit act to explain your rights to you, the consumer. So really your problem lies with the credit act or your inability to read!
if your not prepared to read t&cs then i would suggest you do not apply for these things!
Barclaycard are not advertising an interest free loan! They offer an interest free balance transfer. Which it is! If people want to try and manipulate what companies offer to get money for free, and then get caught out cos they havent read the T&C properly then silly them.
It is impossible to avail of the offer in question, in any practical way, without paying interest, therefore it can hardly be described as an "interest free balance transfer". If you transfer a balance you WILL pay interest.
ah well but as previously pointed out the balance transfer will remain free IF you put purchases on the card - and you pay the interest on the transactions. So in fact the balance transfer is free but the transactions aren't.
Within your terms and conditions it will tell you in which order funds you pay to barclaycard will be used, and surprise surprise, your transactions are the last item.
for example First Direct use funds to pay off your highest rate of interest first (cash, transactions THEN balance transfers) unlike barclaycard and rbs to mention but two... HOWEVER First Direct only offer 0% for 6 months
barclaycard are not misadvertising, they are just taking advantage of customers who do not properly evaluate the offer.
my advice, dump them and join someone else, better still, with interest rates so low take out a loan at around 6.9%, cut up your cards and be gone with them! (hoorah!)
Here are some calculations showing the true interest rate that I did in a spreadsheet. APR on interest-bearing portion of balance Amount borrowed 11.9% 14.9% 17.9%
But with a moderate amount of determination you can keep rolling the 0% offers over more-or-less indefinitely, I've just started my 5th ... (and it's another MBNA card who were also the first :) I'd be interested to know if anyone has found a maximum number of cards that the issuers start balking at.
There is no inconsistency. Say you transfer £2,000. Under barclaycard's conditions:
Unless we allow you a payment holiday during which you do not have to make a minimum payment, each month you must make a minimum payment to us. This will be 3% of the total sums due on your monthly statement for initial Visa, 2.5% for Classic and 2% for Gold and Platinum Barclaycard, or £5 whichever is more; or if the statement balance is less than £5, the entire sum shown as due on the statement balance. During a payment holiday we will continue to charge interest under conditions 3.5, 5.1 and 5.2. The minimum payment must be received by us and paid into your account on or before the payment date given on your monthly statement.
So you must pay, say 3%, which is £60. So you would pay the loan off eventually. And even then, Barclaycard are entitled to invoke:
3.4 The rates set out in clause 3.2(b)(i) are our current balance transfer rates for new cardholders. From time to time we may also offer you a special promotion where we will charge interest at a different rate from the standard balance for a period we will tell you. At the end of any such period we will add the amount remaining on a promotional balance to the standard balance. We will tell you what the rates will be when we give you details of the special promotion or balance transfer offer. You can always check the rate which applies to any transfer balance or special promotion by looking at the statements we give you on the account.
Secondly, you get 0% on the life of the balance ONLY if you send £50 or more per month. If you fail to do this, you will pay 6.9%, which is a worse rate than a good loan provider.
Thirdly,
If you do not pay the statement balance in full on the payment date, we will apply the amount you do pay to reduce what you owe us in the following order:
against any transfer balances and promotional balances (including interest) which an interest rate applies to for an open ended period;
against any transfer balances and promotional balances (including interest) which an interest rate applies to for a fixed period;
against any other interest charges and other charges made under this agreement;
against the cash advance balance;
against the standard balance.
So if you religiously spend exactly £50 every month, and also have a balance tranfer of £2000, you will pay nothing on the £2000, but 14.9% on the £50.
And you won't be paying off that £50 per month (£600 over a year) until you have paid off every penny of your £2000.
Your 13th bill would leave you owing £2004.39. You would have borrowed £2650, and paid £725.90. The interest for the year on your £2000 alone is £80.29. If you treated it as a loan and paid it back over a year, you would pay £225.54 per month (effectively £175.54, disregarding the £50, which you would have spent elsewhere anyway). Interest charges would be £106.48.
I beat this easily with Smile, at 6.8% APR for 12 months, paying £172.68 per month. Plus you don't have to jump through any hoops.
So this deal is a bad one. You are better off tranferring a balance to another card that really does pay 0%, and doing the same thing again when the period finishes (you can get 9 months interest free now).
The cashback is also not what it seems. Say you spend £1000 per month. You transfer any amount (it doesn't actually matter, because it's interest free and you will pay it off in the first month to save money (see above for why this is saving money), and do the minimum to get the 2% (transfer a balance every month). Say we maintain 1p every month.
Despite the fact we made £999.99 in payments, barclaycard penalizes us for not making the full amount, and charges interest on the whole sum.
So you will get 2% cashback - 1.167% (monthly interest) = 0.833%.
Which isn't nearly as good as it sounds.
Plus it's a pain, the terms smell of nasty cheap trickery and taking advantage of people who get impatient, forget, pay off the balance, etc. And you don't get paid till March 2005, so diminish the value by this amount.
It is also unclear whether if I pay off in November 2004 I lose my accrued cashback for the previous year.
So
(a) .833% is not very good (b) it's annoying to administer
So Barclaycard are just the same old scummy high street card they always were.......
You can find
(a) cheaper APRs (b) proper 0% balance transfers (c) as good (0.8% from CashBack Accucard) or better (1% from Leeds & Holbeck) cashback.
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