Woolworths - Credit Card Repayments Not Going to Highest Interest Charged

LTomShugar on 29/01/2018 - 12:18

Hi all

I am after some advice and clarification before I take this further.

I have a Woolworths credit card with a balance transfer amount of $3000 owing at 0% interest. I have been making a lot of purchases on the card this month, mainly to gain the small amount of reward points it would attract. I would normally make a purchase, wait a few days for the pending to disappear and then make a repayment as I was under the impression that repayments should go to to highest interest attracting amounts first. So I could pay off the recent purchase while maintaining the the balance transfer amount but when I received the statement I was charged interest for purchases and almost all of my repayments were attributed to the balance transfer amount with the recent purchases now making up the bulk of the outstanding amount.

Is my understanding wrong in this matter?

Should I take this up with Woolworths financial services and who can I contact (ACCC, ombudsman) if I have trouble resolving this with Woolworths?

Thanks

Financial

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Comments

  • pjetson on 29/01/2018 - 12:27

    I was under the impression that repayments should go to to highest interest attracting amounts first

    Did someone tell you that, or was it written down somewhere?

    Is my understanding wrong in this matter?

    Could be.

  • Xyzzy on 29/01/2018 - 12:32
    +2

    Payments should be applied to the part of the balance with the highest interest rate.

    But my complete guess is, because you were making payments before the purchases had appeared on your bill they were going to the balance with the highest interest rate as at your latest bill.

    But to answer your questions:

    Yes, you should take this up with Woolworths financial sevices, and you can contact the Financial Services Ombudsman https://www.fos.org.au/ if you aren't satisfied.

  • cjbowden on 29/01/2018 - 12:36

    Read the T's & C's when you signed up for the balance transfer. I think you will find they are doing what they said they would.

  • akajin on 29/01/2018 - 13:14

    I could be wrong but my understanding is that you need to make a minimum repayment towards the balance transfer amount per month to maintain 0% interest.

    So if you only paid off amount you have used for the month you may get charged full interest rate on balance transfer amount as you may not have paid minimum repayment towards the balance transfer amount.

  • jimbobaus on 29/01/2018 - 13:20
    +7

    I had a similar situation… i finally found out what was happening.

    Purchase: 20/12 $45
    Payment 24/12 $45… applied to no interest balance.

    Called bank….

    Found out i needed to wait until statement was issued for it to have been applied on the "highest interest" balance as its adjusted when the statement is issued.

    Most likely the same for you… my advice is wait until the statement comes then pay then.. it should then apply to Highest Interest first.

  • chrisd262 on 29/01/2018 - 15:52
    +1

    This is how balance transfer cards make their money.
    If you use the card you are essentially stuffed as it will be the very last charge that is paid off including all interest.
    This is the trap that is widely advertised though.

    The rule is that the new card must never be used - cut it up on receiving it.

    • midlake on 30/01/2018 - 14:13

      Not 100% on this, but I think the NCCPA in 2011 changed this…..

  • askme69 on 29/01/2018 - 23:08

    Same happened to me years ago with Citibank and a BP card for a balance transfer. I transferred 10k from one credit card to another and the Citibank BP card had a 20c per litre discount or something and at that time the 98 RON was the go from them so I used it the day I got the card.

    Rang them the day after to pay the fuel balance so I would not incur interest and they said I cant pay the fuel separately, the payments go off the oldest transaction first. Which was the balance transfer.

    anyway, PIAD the whole thing out in full after 1 day.

    I believed they were made to stop that kind of crap years ago.

  • chrisd262 on 30/01/2018 - 13:10

    If you can find say a 2 year balance transfer option and then destroy the card as soon as you receive it
    it can work out well for some people - it becomes an interest free loan but must also be cleared fully before the expiry date

  • Poolprouk on 30/01/2018 - 15:46

    This is common for all balance transfer offers on credit cards.

    The Golden rule of balance transfers is to NEVER spend on the card while you are still paying off the balance transfer.

    So may people fall into this trap (including me).

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