Question re Balance Transfer and purchase by credit card

countmein on 07/07/2015 - 14:42

a quick question guys

Situation:
I took an offer of 0% BT for 18 months from Citibank Credit Card (12 grand by cheque). I have been paying the minimum payment for a couple months now and can pay the full amount at the end of offer. I understand that I will get charged for interest if I make a purchase with that card.

Now my question is:
will I get charged if I purchase the flight tickets with the same card AND I pay the purchase on the same day? I will still manage to pay the minimum payment each month for the BT.

Reason:
I want to take an advantage of Travel insurance comes with the card so I dont need to buy separately.

Risk:
I dont want to risk getting 'free' Travel Insurance but then I'll get charged for interest for the rest of offer (18 months).

Anyone has done this before or has same experience?

Cheers

Financial

Comments

  • Paul Atreides on 07/07/2015 - 14:50
    +2

    refer to psionix's answer below

  • Choc83 on 07/07/2015 - 14:57
    +3

    incorrect. Legislation passed relatively recently has stipulated that any payment made is applied to the highest interest component of the balance FIRST.

    • Paul Atreides on 07/07/2015 - 15:08

      yep, thanks for correcting me

  • DealzEddy123 on 07/07/2015 - 15:07
    +1

    psionix is correct.

    My advice would be to buy your airfare and then pay it off straight away. then just chip away at the minimum repayment for the BT.

  • countmein on 07/07/2015 - 16:15

    thanks for your comments guys.
    I am googling to find out if Citi follows this regulation (back to 1st Jul 2012) and going to find the paper based T&C when i get back home. I found NAB does (http://learn.nab.com.au/where-do-credit-card-payments-go)

    I just knew about this 'payment hierarchy' today so thanks guys

  • tooblue on 07/07/2015 - 21:13
    +2

    If you have the card after the legislation passed, the payment will automatically apply to the highest rate component first. However be aware of the difference between purchase day and the transaction record day that the transaction record day may be a few days later. You may make the payment on the purchase day but if the transaction is not recorded yet, your payment will go to the balance transfer component which does not contribute to you purchase amount at all. Or you can wait a few days until you see the purchase on your Internet Banking. Of course there is the risk you will have to pay a little bit interest.

    It all depends on how the bank calculates the interest and statemnent period. Better consult your bank first.

  • sagax on 07/07/2015 - 21:53
    +1

    Make sure the charge hits your credit card before you transfer money in. You could get yourself into a situation where you BPay or transfer money onto your credit card account, but as there is no (what they call) retail balance the transfer is used to pay off your balance transfer. Then to avoid having to pay interest for the charge that then hits your card the next day you'll have to transfer money over again, thus negating the benefit of the 0% BT.

    I've recently had this happen with Citi as I was too eager to pay for a recent purchase. You can call them up and get them to tell you what your Retail Balance if you're not sure where you stand.

  • ilsan0 on 07/07/2015 - 21:59

    Pay the monies at Australia post. You will be charged $2.50 fee but money goes in same day and shows up the next on the card.
    I was told this by Citibank

    • Baysew on 08/07/2015 - 11:01

      Why not just pay via bpay for free ?

  • ilsan0 on 08/07/2015 - 11:59

    It was in context of same day.
    Bpay is next day

  • Baysew on 08/07/2015 - 13:24

    Same for Post Office and Bpay.

    How long will it take for my payment to go through?

    BPAY payments are acknowledged by business or biller and your financial institution on the day the payment is made, as long as it is a Banking Business Day^ and the payment is made before the cut-off time set by your financial institution (usually the end of the financial institution’s business day) — contact your financial institution if you need to know more.

  • countmein on 08/07/2015 - 17:16

    Thanks guys. I take a note for 1-2 days until it appears in the statement, and 1-2 days for bpay/aupost.
    Not an ozbargain spirit but i think 1-2 days difference still ok for me, so i can live with that..
    cheers

  • FiDad on 13/07/2015 - 13:45

    Keen to know this as well as I will also have to do this in few months time. Let us know how you go

  • Davidadelaide on 14/07/2015 - 14:23

    this is how I understood it when I had a bt with Citibank. ( this should have been explained in the fast talking agreement when you applied).
    Any money paid toward your card will pay off the balance transfer first. If you make a purchase, no money will be paid off it, until the balance transfer is paid. And it will accumulate interest until that time.

  • countmein on 21/07/2015 - 13:20

    In the meantime I've been waiting for a better flight deal, found this https://www.ozbargain.com.au/node/203684
    Apologies guys i couldnt tell you how i go. but I reckon they follow the rule (payment hierarchy).

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