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A BT dilemma

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too-much-time
Frequent Contributor

A BT dilemma

A few months ago I picked up a nice rate on a promotional balance transfer, which posted on a card I don't use during this time, since any charges will accrue interest until the transfer has been paid. But it just occurred to me that the annual fee is coming up! So I was wondering if this fee is different from charges and will be paid before anything else.

Message 1 of 19
18 REPLIES 18
myjourney
Super Contributor

Re: A BT dilemma


@too-much-time wrote:

A few months ago I picked up a nice rate on a promotional balance transfer, which posted on a card I don't use during this time, since any charges will accrue interest until the transfer has been paid. But it just occurred to me that the annual fee is coming up! So I was wondering if this fee is different from charges and will be paid before anything else.


Bump for help with a very good question

Before you app think...
Have you done your research of the CC?
Does it fit your spending?
Do you have a plan for the bonus w/o going into debt?
Can you afford the AF?
Do you know the cards benefits? Is it worth the HP?
Message 2 of 19
lg8302ch
Senior Contributor

Re: A BT dilemma

hmm...Interesting question. Did you already call your lender ?

Message 3 of 19
Creditaddict
Legendary Contributor

Re: A BT dilemma

Any payment above the minimum payment will be applied to charges at the highest interest rate... in this case any purchase... so just pay your minimum for the month plus the annual fee billed and you will continue to pay no interest.

The exception to the rule is business cards... they did not get put in with the card act that made this new rule apply for new charges being barried under low interest, etc.

Message 4 of 19
too-much-time
Frequent Contributor

Re: A BT dilemma

Thank you, that's news to me, but good!

Then there's the nagging concept of average daily balance. Even though the BT is at 0% APR, the loan still constitutes a carried over balance, so I was wondering if you have to pay a one-time interest on the annual fee.

Message 5 of 19
slick_shoes_182
Valued Member

Re: A BT dilemma


@Creditaddict wrote:

Any payment above the minimum payment will be applied to charges at the highest interest rate... in this case any purchase... so just pay your minimum for the month plus the annual fee billed and you will continue to pay no interest.

The exception to the rule is business cards... they did not get put in with the card act that made this new rule apply for new charges being barried under low interest, etc.


Are you sure about this? 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.

Message 6 of 19
slick_shoes_182
Valued Member

Re: A BT dilemma

This


@slick_shoes_182 wrote:

@Creditaddict wrote:

Any payment above the minimum payment will be applied to charges at the highest interest rate... in this case any purchase... so just pay your minimum for the month plus the annual fee billed and you will continue to pay no interest.

The exception to the rule is business cards... they did not get put in with the card act that made this new rule apply for new charges being barried under low interest, etc.


Are you sure about this? 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.


This is the same reason that you should not make new purchases on a card with a 0% promotional offer, even though the Credit Card Act would lead you to believe that the new charges would be paid off first.

Message 7 of 19
Creditaddict
Legendary Contributor

Re: A BT dilemma


@slick_shoes_182 wrote:

This


@slick_shoes_182 wrote:

@Creditaddict wrote:

Any payment above the minimum payment will be applied to charges at the highest interest rate... in this case any purchase... so just pay your minimum for the month plus the annual fee billed and you will continue to pay no interest.

The exception to the rule is business cards... they did not get put in with the card act that made this new rule apply for new charges being barried under low interest, etc.


Are you sure about this? 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.


This is the same reason that you should not make new purchases on a card with a 0% promotional offer, even though the Credit Card Act would lead you to believe that the new charges would be paid off first.


it's not lead you to believe... it is the way it is now by law on personal credit card accounts.

Now don't be confused with your minimum payment...

If you have:

$1,000 at 0% with a minimum of $100

you charge $500 at regular purchase rate

you would have to pay $600 to keep the account from billing interest on the purchases at purchase rate and pay the minimum as normal.

Message 8 of 19
FinStar
Moderator Emeritus

Re: A BT dilemma


@slick_shoes_182 wrote:

This


@slick_shoes_182 wrote:

@Creditaddict wrote:

Any payment above the minimum payment will be applied to charges at the highest interest rate... in this case any purchase... so just pay your minimum for the month plus the annual fee billed and you will continue to pay no interest.

The exception to the rule is business cards... they did not get put in with the card act that made this new rule apply for new charges being barried under low interest, etc.


Are you sure about this? 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.


This is the same reason that you should not make new purchases on a card with a 0% promotional offer, even though the Credit Card Act would lead you to believe that the new charges would be paid off first.


Check with the lender as the standard APR information for revolving balances (regardless if you pay over the minimum to cover the annual fee) will still be considered and apply for any balance/transactions under the purchase APR and would incur or be subject to finance charges.  Now, if your card had an offer of 0% APR for both balances (BT & Purchases), then it would be no issue since both would be under the same terms/calculation until the expiry of such promotion.  However, this is not the case.

Message 9 of 19
subsnao
Regular Contributor

Re: A BT dilemma

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...


In the garden as of 2/22/2015
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TU: 753 (Discover FICO 7/2014) EQ: 721 (FICO 4/2014) EX: 723 (FICO 3/2014)
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Message 10 of 19
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