H.O. writes: I took up an unsolicited offer from Sainsbury’s Bank of an interest-free loan with just a 3 per cent set-up charge.
But Sainsbury’s linked the £4,000 I borrowed to my Sainsbury’s credit card. I am now charged interest at 16.94 per cent on all purchases unless I pay off the full amount on the monthly statement, including the £4,000.
Though I am sure this is legal I regard it as unfair trading. For many years I have used the card for all my purchases and paid the full balance by the due date to avoid paying interest.
Sitting target: Adverts for the Sainsbury’s balance transfer offer
Tony Hetherington replies: The letter you received from Sainsbury’s Bank looked straightforward. It uses terms such as ‘interest-free’, ‘pay no interest’ and ‘0 per cent interest’.
But it is not the kind of loan that hands over £4,000 for you to spend in any way you wish. It is a way for you to transfer the balance on a rival credit card, so it becomes part of the balance on your Sainsbury’s credit card.
The advantage of this is you stop paying interest on the £4,000. But as you found, there is a sting in the tail. You have always paid off the balance on your Sainsbury’s card each month rather than face interest charges. Yet now, you suddenly face such charges.
You sent me your card statement showing a balance due of £4,810 including the £4,000 balance transfer. You paid exactly £1,000 which more than covers the amount you spent on purchases, but you faced an interest charge of more than £13.
Tony says the letter one reader received from Sainsbury’s Bank was misleading
When you protested, Sainsbury’s told you: ‘The only way you can stop interest being applied is to pay off the whole balance including the balance transfer.’ This is correct.
The explanation lies in the small print on the back of the bank’s letter offering you the £4,000. There are 11 points listed as conditions. The ninth of these says: ‘If you make purchases, these won’t be interest-free unless you pay off your entire balance each month (your balance includes any balance transfers).’
In other words, there are just two ways you can avoid paying interest. The first would have been to stump up £4,810 to clear your card in full. But if you had been able to do this, why would you have bothered paying a 3 per cent fee to transfer the debt from your other card? Surely you would simply have paid off that card in full?
The other way to avoid paying interest is to accept the £4,000 transfer to the Sainsbury’s card, make the minimum repayments, but lock the card away and do not use it until the interest-free period on the £4,000 has expired. If you still had your other credit card, you could use this for shopping and pay off each month’s balance in full. Or you could apply for another card and stop using the Sainsbury’s card.
I approached Sainsbury’s Bank and it told me: ‘Mr H.O. has opted for one of our balance transfer credit cards where we offer zero per cent on the transferred balance with a 3 per cent fee.
‘The zero per cent remains on the transferred balance for the duration of the offer period, in this case 18 months. The customer is still required, however, to pay interest on any new purchases. We make this clear in our terms at the point of purchase.’
All this is true. But equally, the only reason you have been charged interest on your purchases is because of the £4,000 balance transfer. Not because you failed to pay for the purchases themselves. The balance transfer scheme may well work for lots of people, but as gift horses go it is worth taking a close look in its mouth.
Your letter helps thwart fraudsters
D.M. writes: I wonder if you could offer some advice. I have been approached by Portland Investment Group of Sheffield, saying it can sell my carbon credits for £9.50 each, giving a return of £13,347. It looks attractive, but it wants me to pay £2,100 to ‘reformat’ the credits, though it says this fee is refundable. Have you come across this company and do you think I would lose the £2,100 if I go ahead?
Yes, I have come across these crooks and yes, you would lose your money. I warned last month that the real Portland company in Sheffield runs a recruitment business.
The people who have stolen and misused its name are fraudsters. They have got hold of lists of victims of past scams, including investors in carbon credits and plots of land. The crooks claim they can magically market such investments for a profit, but everyone has to pay an up-front fee.
There is no way to turn your carbon credits into a different investment and your £2,100 would be lost. But you have helped lots of other potential victims by telling me that if you had fallen for this scam, your £2,100 would have gone to bank sort code 40-09-00 and into account number 84009789 in the name of E Simpson.
This is an HSBC account so I contacted the bank which moved into action fast. HSBC told me: ‘We are extremely grateful for the information.’
The account has been ‘inhibited’ so no more victims’ funds should be lost.
Read Tony Hetherington’s case files at thisismoney.co.uk/hetherington
If you believe you are the victim of financial wrongdoing, write to Tony Hetherington at Financial Mail, 2 Derry Street, London W8 5TS or email firstname.lastname@example.org. Because of the high volume of enquiries, personal replies cannot be given. Please send only copies of original documents, which we regret cannot be returned.
We’re watching you…
Allure: The fake gold mining ads
Two tricksters who were behind a network of companies that raked in more than £1.5 million from investors in a gold mining scam have been banned for the maximum 15 years from acting as the directors of any British company.
Gary Kevin Potter, 55, of Leigh-on-Sea in Essex, and Aldo Atherley-White, 48, of Panama, sold stakes in Montana Leon, a company which they claimed owned 30 per cent of a gold mine in Peru. I warned in 2016 that the investment was being marketed illegally and without authorisation from the Financial Conduct Authority.
Investigators from the Insolvency Service found no evidence that Montana Leon or anyone connected with it had any genuine ownership rights to the mine, or approval from the government of Peru to carry out any mining work.
THIS IS MONEY’S FIVE OF THE BEST CREDIT CARDS