Juggling a balance transfer and target spend promo

[andye]

Mrs andye has recently received a Virgin Flyer card:

The offer was:
Half annual fee for first year
0% balance transfer for 15 months
10K VFF points for $5K spend over 3 months

The BT was quite generous and that alone makes the deal worthwhile

However the target spend offer is more complicated as (presumably), you get no interest-free days on the spend as you will not clear the whole balance each month

My plan is to pay off the spend as it appears on the online tranactions to avoid up to a whole month's interest on the spend.

Has anyone else encountered this issue and how did they work around it?

 

[aaronjames000]

following! i'm also keen to know how others have done it/ do it...

 

[knasty]

They may not apply intra-month payments until statement date, so safest thing would be to spend just before statement date.

 

[andye]

I'm really only after info on the issues in the OP but there are a few further considerations to factor into the 'game':

It's not her best yielding CC (I'd prefer to use Amex when we can)
The points earn drops after $1500 per statement so would not like to achieve the $5K all in one month (we have an alternative MC which earns a bit better than the standard rate and much better than the reduced rate)
The points earn devalues after the second month

 

[JohnK]

Your suggestion is the best solution. Pay off the amount you spent each month as soon as it hits your account. You may end up paying a little bit of interest but not that much in grand scheme of things.

 

[andye]

Despite paying all her purchases as she goes, the bottom of her V Flyer statement shows that the 0% BT balance has reduced by the $5K value of the retail spend and she has been charged $40 interest

Have sent an email but if V Money are correct (in not paying off the higher interest sums first), it would seem there is no way of taking advantage of both offers without incurring interest and diminishing the value of the BT

The bonus points have posted but they look quite expensive at the moment

 

[PLANT]

Rule 1: Balance transfer.......never use card after balance transfer
Rule 2: Refer to Rule 1!

You should have made a $5K spend, Paid it off immediately(or had $5K credit on card before spend) before using the balance transfer option from another card.
Unless you pay off the card now you will continue to incur interest payments.

 

[aaronjames000]

But if you've done a balance transfer, in my case a Citibank cheque to self, and then spend on the card (accidentally still had a direct debit to the card) when I make a repayment, shouldn't it pay off the purchase/s first? (before repaying any of the balance transfer amount?)

 

[aaronjames000]

I thought the law said that repayments go to the higher interest debt first? So not the 0% balance transfer?

 

[andye]

Rule 1: Balance transfer.......never use card after balance transfer
Rule 2: Refer to Rule 1!

You should have made a $5K spend, Paid it off immediately(or had $5K credit on card before spend) before using the balance transfer option from another card.
Unless you pay off the card now you will continue to incur interest payments.

I may well have to learn that lesson but I will still try to push it with Virgin (as I was thinking the same way as aaronjames000)

 

[aaronjames000]

I accidentally made $75 in purchases, which I paid off the following day, and was charged $50 interest!!!

 

[andye]

From their T&Cs

For credit contracts which commenced
on or after 1 July 2012 and which are not
designated as “Business Accounts”, we
will apply payments firstly to any monthly
instalments due in the current statement
period and then we will apply payments first
to the portion of the closing balance of your
most recent statement which attracts the
highest interest rate and then to the portion
which attracts the next highest interest rate
and so on. Payments are then applied to
balances that have not yet appeared on your
statement in a similar fashion.

If I'm reading this correctly, I may have messed up by paying as I went along rather than at the end of the statement period. In trying to minimise the interest between purchase and statement, I have inadvertently been reducing the balance transfer. Hope my error helps someone else.

Will read any T&Cs more carefully another time and more importantly not assume

PS: I see knasty was correct

 

[JohnK]

Despite paying all her purchases as she goes, the bottom of her V Flyer statement shows that the 0% BT balance has reduced by the $5K value of the retail spend and she has been charged $40 interest

Need to make sure you pay the purchase after it hits account. You won't avoid paying a little interest.

Think my $16,000 balance transfer has reduced to ~$15,500 after 4-5 months.

 

[lovetravellingoz]

But if you've done a balance transfer, in my case a Citibank cheque to self, and then spend on the card (accidentally still had a direct debit to the card) when I make a repayment, shouldn't it pay off the purchase/s first? (before repaying any of the balance transfer amount?)

With Citibank if you make any purchase after BT you will get hit for interest on day 1 for that purchase/s. There is no longer any interest free period.

If you have a BT card any spend should be on another card.

So far my wife had a couple of spends on her linked card by accident. I "overpaid" the amounts with days and so far the interest charges have been small.

Have to love getting $37K at 0% for a year though

 

[Crazy Diamond]

Despite paying all her purchases as she goes, the bottom of her V Flyer statement shows that the 0% BT balance has reduced by the $5K value of the retail spend and she has been charged $40 interest

Have sent an email but if V Money are correct (in not paying off the higher interest sums first), it would seem there is no way of taking advantage of both offers without incurring interest and diminishing the value of the BT

The bonus points have posted but they look quite expensive at the moment

Iv'd had this occur with Virgin Money twice in the past - I had long term 0% cheques to self going and During that period tried to take advantage of triple points promos by making one large retail purchase and paying it off the next day, with a bit extra to cover any interest. End of month statement came and they'd applied the full repayment against the 0% cheque to self, and charged large interest on the retail purchase.

i wasn't happy so called them and quoted the 2012 legislation, they quickly reversed and reapplied the repayment and credited me back the interest as a "gesture of goodwill".

second time I tried it again right at end of month, but same thing (and same credit and fix). So I'm not sure if it's their systems aren't set up to allocate correctly in order of priority (esp mid month) or something more sinister.

Suffice to say I'm not trying to do both promos at the same time anymore...

 

[knasty]

Payments are applied against amounts 'due'. Until a retail purchase is statemented it's not due. This is why I advise to spend a couple of days before statement date then payoff on statement date.

 

[Crazy Diamond]

Payments are applied against amounts 'due'. Until a retail purchase is statemented it's not due. This is why I advise to spend a couple of days before statement date then payoff on statement date.

Agree, but they don't seem to be following their T&Cs (and consumer credit laws) for payments made BEFORE anything is due ie mid month after you've paid off entire previous months balance due - if you have nothing due mid month, your repayment order of priority should go per last sentence in their T&CSs which Andre listed above is "balances that have not yet appeared on your statement in a similar fashion". To my semi legal trained mind, "in a similar fashion" has to have some reference to highest to lowest interest rate applicability. Payments shouldn't just default to the one which they know will always be at 0%

 

[_TheTraveller_]

Since we're on the topic of this, does anyone know if westpac operates any differently? Westpac only has $1000 min spend but I would still like to minimise the interest rates. How should I proceed with keeping my BT while reaching the $1k min spend?

 

[Oubline]

I have the same Westpac card. I activated the card, immediately spent the $1k then paid it off. As soon as the card was at $0 again I called customer service and asked if any BT offers were available. They easily put me on 12 months 0%. This was two months ago. Also avoided the annual fee by opening a free eSaver before application, so quite happy with this card!

 

[_TheTraveller_]

I have the same Westpac card. I activated the card, immediately spent the $1k then paid it off. As soon as the card was at $0 again I called customer service and asked if any BT offers were available. They easily put me on 12 months 0%. This was two months ago. Also avoided the annual fee by opening a free eSaver before application, so quite happy with this card!

Damn I've already applied fro the BT during the application. How should I proceed with meeting the min spend? Spend it and wait for it hit the account before paying it off?