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A BT dilemma

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FinStar
Moderator Emeritus

Re: A BT dilemma


@subsnao wrote:

Wouldn't the fee be charged the regular purchase APR as it does not fall under the category of Balance Transfers, Cash Advances, etc. When you think about it, an annual fee is almost like a purchase, as you are buying the right to use the card for another year...


Correct. The annual fee is billed under the standard "Purchases" category.

Message 11 of 19
Creditaddict
Legendary Contributor

Re: A BT dilemma

I'm pretty shocked how many seem to almost be saying you can't get a non promo balance paid before paying the promo rate because of the bank and applying payments!
Wasn't credit act passed in 2009 or something?
Message 12 of 19
slick_shoes_182
Valued Member

Re: A BT dilemma


@Creditaddict wrote:
I'm pretty shocked how many seem to almost be saying you can't get a non promo balance paid before paying the promo rate because of the bank and applying payments!
Wasn't credit act passed in 2009 or something?

Yes, the law was passed and the banks adapted. They have found a way to work around the rule, at least until the courts slap them down and force them to operate in another way. At some point, if their ways of profiting from balance transfer offers completely go away, you will know it because they will stop making the offers, haha.

 

You can read my earlier post about how they rationalize paying off the temporary 0% balance before the new purchases and fees that have non-zero APR.

Message 13 of 19
too-much-time
Frequent Contributor

Re: A BT dilemma


@Creditaddict wrote:

 

so just pay your minimum for the month plus the annual fee billed


 

Just not ahead of the statement date.


Chase Sets Early Payment Trap, Customer Falls Into It


@slick_shoes_182 wrote:

 

My bet would be that the annual fee will have an interest rate less than or equal to the rate that the promotional offer will have when it ends. Even though the person is temporarily paying 0% on the balances (for the promotional period) the credit card company will look at the non-promotional rate in deciding which balance to pay. This way, they can apply the person's payment to the 0% balance, earn interest on the annual fee, and claim that they are not violating the credit card act. Tricky.


 

We shall see!

 

Message 14 of 19
FinStar
Moderator Emeritus

Re: A BT dilemma


@Creditaddict wrote:
I'm pretty shocked how many seem to almost be saying you can't get a non promo balance paid before paying the promo rate because of the bank and applying payments!
Wasn't credit act passed in 2009 or something?

I'm not sure why you're shocked.  This is no news.  Please reference the other folks' posts so you're familiar with how lenders apply specific APRs to multiple balance structures.  The Card Act does not apply in these cases.

Message 15 of 19
slick_shoes_182
Valued Member

Re: A BT dilemma


@too-much-time wrote:

@Creditaddict wrote:

 

so just pay your minimum for the month plus the annual fee billed


 

Just not ahead of the statement date.


Chase Sets Early Payment Trap, Customer Falls Into It


@slick_shoes_182 wrote:

 

My bet would be that the annual fee will have an interest rate less than or equal to the rate that the promotional offer will have when it ends. Even though the person is temporarily paying 0% on the balances (for the promotional period) the credit card company will look at the non-promotional rate in deciding which balance to pay. This way, they can apply the person's payment to the 0% balance, earn interest on the annual fee, and claim that they are not violating the credit card act. Tricky.


 

We shall see!

 


Please let us know what you discover! Good luck!

Message 16 of 19
too-much-time
Frequent Contributor

Re: A BT dilemma

Financial institutions can be so shameless! A Chase card of mine is presently used for a convenience check. The annual fee was posted halfway through its recently completed billing cycle and accrued purchase interest to be posted for the rest of it, although before the statement date I had paid the fee and before the prior cycle’s due date its minimum payment amount. The interest was a fraction of a dollar, but what happens in a month? I hope for nothing, but cannot escape the thought that the payments may have been applied exclusively towards the convenience check.

The answer may well be found in the similar case of the Citi card that brought about this thread. No interest was charged for the following cycle. As for the then present cycle of that card, the annual fee kicked in just before the end of it and triggered a minimum interest fee, which was actually more, half a dollar, than that of the Chase card. Go figure!

Message 17 of 19
too-much-time
Frequent Contributor

Re: A BT dilemma

What happened the following billing cycle is that Chase keeps charging interest for the annual fee. Each full month is still less than a dollar, but the experience serves as a reminder not to charge any purchases to the card.

Message 18 of 19
slick_shoes_182
Valued Member

Re: A BT dilemma


@too-much-time wrote:

What happened the following billing cycle is that Chase keeps charging interest for the annual fee. Each full month is still less than a dollar, but the experience serves as a reminder not to charge any purchases to the card.


Hi, I'm curious, did you pay more than the minumum balance, and if so, was any amount applied to the balance which is not at 0% interest?

 

Just want to double check my understanding which is that the minimum balance can be applied to any balance (the bank would choose the lowest APR, your 0% promo,  to maximize their profit). Then, for any amounts greater than the minimum payment, the Credit Card Act requires them to pay off the highest interest balance... but I think that they will still pay the 0% balance based on it's higher permanent interest rate instead of the 0% temporary promo rate.

 

Thank you!

Message 19 of 19
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