Transfers and Offers Example 1

Example 1: Purchase Plan compared to money transfer

Jane wants to buy a new 3D TV for £750. She has just received two offers from Barclaycard:

Feature

Promotional offer

After promotional period

Money transfer

0% for 9 months + 2% fee

18.9% interest rate after the 0% period expires

Purchase Plan

0% for 9 months + 4% fee; or
0% for 18 months + 7% fee

No balance remaining on the Plan as it is repaid in equal instalments over the term

So which offer is best for her? Here’s how the costs compare depending on how Jane uses her Barclaycard:

The three examples below show how the answer could vary based on how Jane uses her Barclaycard. (In each example, we have assumed equal repayments over the period given.)

 

1. If Jane repays the cost of the TV within 9 months and doesn’t use her credit card for anything else:

Cost with Purchase Plan

£30

Cost with money transfer

£15

  • Money transfer is cheaper because it has a lower fee and there are no other charges
  • Purchase Plan on the other hand has the benefit of standard credit card protection on purchases ( Section 75 and chargeback benefits ), because the TV purchase is made using her Barclaycard

 

2. If Jane repays the cost of the TV within 9 months and also uses her credit card to buy her monthly groceries of £130 which she then repays each month:

Cost with Purchase Plan

£30

Cost with money transfer

£30

  • With money transfer, Jane is charged interest on her new purchases from the date she makes her purchase to the date she makes her payment, up until the final month when she has repaid the whole balance
  • With Purchase Plan, there is no interest charged on her new purchases because her Plan is kept separate to her other spending

 

3. If Jane takes 18 months to repay the cost of the TV and uses her credit card to buy her monthly groceries of £130 which she then repays each month:

Cost with Purchase Plan

£53

Cost with money transfer

£69

  • Money transfer now costs more than Purchase Plan, because of the interest Jane has to pay after her 0% promotional period ends
  • Purchase Plan is now cheaper despite the higher fee charged because Jane has chosen a longer term for her Plan. It will also help Jane to ensure she repays the purchase within a fixed period of time. Jane also has the standard credit card protection on the purchase of the TV
    ( Section 75 and chargeback benefits )