Questions Of Cash: 'Credit card transfer left me with fees and interest to pay'


Q I have an MBNA BMI credit card. In October and November I transferred £4,400 to it from other credit cards, paying a 3 per cent transfer fee. I have since paid off my monthly transactions, leaving what I thought was an interest-free balance to ride. But MBNA allocates payments received against the interest-free balance transfers, charging interest on my recent transactions. I have been charged interest totalling £135.98 for November and December on top of the 3 per cent balance transfer fees of £133. So to avoid charges I must clear the balance. MBNA says it informed me of its payment allocation process and I should have read the small print. The only concession MBNA has made is to reduce my interest rate from an APR of 1.8 per cent per month to 1.4 per cent. JL, Radlett.

A It is common practice in the credit card industry to apply all payments to the part of the debt that attracts the lowest interest, or no interest. "The vast majority of credit card providers follow the 'low to high' payment allocation method," says MBNA. It adds: "The reason we do this is because we believe it is fair that customers should pay off first the money they have borrowed at promotional or discounted rates. Promotional rates are offered to new customers and also to existing customers as a reward for being a responsible and valued customer. We make a clear disclosure to customers about payment allocation method through our summary boxes (online and on printed material), our terms and conditions and the back of every credit card statement a customer receives."

Despite this, your lack of awareness of this practice is shared by many consumers. While it can be sensible to transfer outstanding balances from cards where you pay a high rate of interest on to another card that offers an interest-free transfer, it is also sensible not to use the new card for purchases until you have paid off the transferred balance. Other spending might be conducted instead on an existing credit card.

It is particularly important that after making an interest-free transfer that you do not make any cash withdrawals using that credit card, as this will usually generate very high levels of interest charges, which will be outstanding until the rest of the debt is cleared. Consumer groups and the Government are unhappy with the way credit card companies apply payments to the lowest interest elements of the balance and the Government has published plans to ban the practice, which it is currently consulting on. The only credit card companies which don't apply payments to the lowest interest first are Nationwide and Saga.

Q I travel overseas on a regular basis and as I don't like public transport I use car rental companies a lot. In recent months I've become bothered by the increase in costs associated with hiring cars – particularly the excess insurance costs. I know car insurance excess can be expensive, but have you any suggestions to reduce the cost of car hire insurance? TA, by email.

A You can greatly reduce the costs associated with hiring a car by independently obtaining cover for the excess for any damage to the vehicle. Buying a Collision Damage Waiver from the hire car company can still leave you with a bill of a thousand pounds or so if the car is damaged while in your care, because of the insurance excess (the amount you must contribute if your car is damaged while you hire it).

You can insure against paying this excess, but the cost can be high when taking out a policy through the car rental agency (typically over £10 a day). Insurance policies are available elsewhere that provide either annual or monthly policies to meet the excess costs. Insurance4carhire.com provides an annual policy for excess insurance in Europe for £49 a year, covering the policyholder and another six named drivers, providing they are aged between 21 and 74. Policies are also available for hiring cars in North America and worldwide.

Q My son recently received an email from Zoom Financial Services in Australia, offering him a job, saying that the company had found his CV on an online jobs board. He has been out of work for 12 months and initially thought this may be a definite job offer, but felt he should ask some advice before contacting them. Upon reading the email, I told him to delete it. Someone else may not be so lucky and could end up landing themselves in a real mess. MB, by email.

A You were right to advise your son to delete the email. Others have not been so lucky and have been caught out by a scam. There is a legitimate financial services company called Zoom in Australia (and others in Alabama and India) – but they did not contact your son. The people who did were criminals. The objective may have been to get an innocent person to operate a bank account that would in practice have been used to transfer the proceeds of drug sales or other illegal activities to accounts in other countries. This would potentially have led to your son being in severe difficulty with the police and might have given rise to a criminal prosecution against him.

Alternatively, the fraudsters might have been seeking your son's bank account details in an attempt to empty his account of any funds. The offer was superficially attractive – a basic salary of £1,500 per month, plus 5 to 7 per cent of all transactions conducted by your son on behalf of the criminals. But the golden rule is that any offer that appears too good to be true, probably is just that. Another rule to remember is that just because a website looks professional is no guarantee that it is not fraudulent and invented. Fraudsters are just as capable as anyone else of creating a website that is very impressive. Always make some checks on the legitimacy of a person or company before responding to an email or website.

PROMOTED VIDEO
Arts and Entertainment
On set of the Secret Cinema's Back to the Future event
filmBut why were Back to the Future screenings cancelled?
News
Susan Sarandon described David Bowie as
peopleSusan Sarandon reveals more on her David Bowie romance
Sport
Lewis Hamilton walks back to the pit lane with his Mercedes burning in the background
Formula 1
Arts and Entertainment
The new characters were announced yesterday at San Diego Comic Con
comic-con 2014
Sport
Arsenal supporters gather for a recent ‘fan party’ in New Jersey
football
Arts and Entertainment
No Devotion's Geoff Rickly and Stuart Richardson
musicReview: No Devotion, O2 Academy Islington, London
News
i100
News
newsComedy club forced to apologise as maggots eating a dead pigeon fall out of air-conditioning
Life and Style
Balmain's autumn/winter 2014 campaign, shot by Mario Sorrenti and featuring Binx Walton, Cara Delevingne, Jourdan Dunn, Ysaunny Brito, Issa Lish and Kayla Scott
fashionHow Olivier Rousteing is revitalising the house of Balmain
News
i100
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Senior Risk Manager - Banking - London - £650

    £600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...

    The benefits of being in Recruitment at SThree...

    £18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...

    Test Analyst - UAT - Credit Risk

    £280 - £300 per day + competitive: Orgtel: Test Analyst, Edinburgh, Credit Ris...

    Trainee Recruitment Consultants - Banking & Finance

    £20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

    Day In a Page

    Best comedians: How the professionals go about their funny business, from Sarah Millican to Marcus Brigstocke

    Best comedians: How the professionals go about their funny business

    For all those wanting to know how stand-ups keep standing, here are some of the best moments
    Jokes on Hollywood: 'With comedy film audiences shrinking, it’s time to move on'

    Jokes on Hollywood

    With comedy film audiences shrinking, it’s time to move on
    Edinburgh Fringe 2014: The comedy highlights, from Bridget Christie to Jack Dee

    Edinburgh Fringe 2014

    The comedy highlights, from Bridget Christie to Jack Dee
    Evan Davis: The BBC’s wolf in sheep’s clothing to take over at Newsnight

    The BBC’s wolf in sheep’s clothing

    What will Evan Davis be like on Newsnight?
    Finding the names for America’s shame: What happens to the immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert?

    Finding the names for America’s shame

    The immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert
    Inside a church for Born Again Christians: Speaking to God in a Manchester multiplex

    Inside a church for Born Again Christians

    As Britain's Anglican church struggles to establish its modern identity, one branch of Christianity is booming
    Rihanna, Kim Kardashian and me: How Olivier Rousteing is revitalising the house of Balmain

    Olivier Rousteing is revitalising the house of Balmain

    Parisian couturier Pierre Balmain made his name dressing the mid-century jet set. Today, Olivier Rousteing – heir to the house Pierre built – is celebrating their 21st-century equivalents. The result? Nothing short of Balmania
    Cancer, cardiac arrest, HIV and homelessness - and he's only 39

    Incredible survival story of David Tovey

    Tovey went from cooking for the Queen to rifling through bins for his supper. His is a startling story of endurance against the odds – and of a social safety net failing at every turn
    Backhanders, bribery and abuses of power have soared in China as economy surges

    Bribery and abuses of power soar in China

    The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
    Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

    Highland terriers steal the show at opening ceremony

    Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
    German art world rocked as artists use renowned fat sculpture to distil schnapps

    Brewing the fat from artwork angers widow of sculptor

    Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
    BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

    BBC takes viewers back down memory lane

    The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
    Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

    Nicolas Cage shines in low-budget drama Joe

    Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
    How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

    Make your own ice lollies and frozen yoghurt

    Think outside the cool box for this summer's tempting frozen treats
    Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

    Fiesta is UK's most popular car of all-time

    Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride