Credit card query regarding interest

[foxy86]

I took a credit card out on 0% on balances for around 20 month and have it set up on direct debit to be paid way above the limit every month.

my issue, I made a purchase and paid off in full 2 days later. I’ve noticed 2 lots of interest be added for this purchase. Is this what happens regardless if you pay off a purchase in full if you have a 0% payment actively being paid off?

just wondering if it’s a phone call I need to make or a balance transfer I need to make to another card.

The amount you paid will be set against the oldest debt, so not against the purchase. If you don't have 0% on purchases, then you will pay interest until the card is cleared.

That is how I understand it anyway.

I’m not sure above is the case anymore as the card company is required to offset payment against the most expensive debt first now. Regardless if paid off 2 days later I don’t see why there would be any fee, unless it was treated as a cash advance rather than a purchase? I would phone them and ask

Yes, this often catches people out.

You probably have a 0% balance transfer deal (not 0% purchases). With many UK cards this means the transferred balance is at 0%, but new purchases are not at 0% unless the card specifically says 0% on purchases. Because there is already a balance on the card, the interest-free grace period on purchases disappears.

So even if you buy something and pay it off two days later the card company may still charge interest from the purchase date until the statement/payment cycle clears the purchase balance. There will be two interest charges because interest is added daily until the payment is processed then residual interest (sometimes called trailing interest) is added on the next statement.

Even overpaying the direct debit may not fix it because in the UK payment hierarchy usually goes (1) Highest interest balance first (2) Then lower interest balances (like the 0% transfer). But interest can still accrue between the purchase date and the payment posting.

Yeah, I think I remember seeing something like this. I will see about doing a balance transfer then and have a separate card for purchases then. I’m not paying much interest but it’s going to make it take longer to pay the card off