How CC Payments Are Applied

[Karunch]

I've recently got a NFCU Cash Rewards Visa that I started running all of my monthly bills through, since it is the only card that I have that offers cash back.  It's only 1% cash back, but it's better then nothing.  Since NFCU is offering the 0% BT's, I went and purchased a digital SLR camera that I've been wanting for a while now.  I paid for it with one of my other cc's, and then I'm transferring the balance to NFCU to take advantage of the 0% offer for 12 months. 

But my question is about how cc payments are applied, and I just want to make sure that I understand everything correctly.  The minimum payment will be applied towards the lowest APR, and then any payment above and beyond that will be applied towards the balance with the highest APR?

Here's an example:

$500 purchases in a month

$2,000 balance transfer

If my minimum payment were lets say $50, if I were to pay at least $550 ($50 minimum, and then $500 to cover my purchases for that month) then would I not get charged any interest?  The past few months I've always been paying my cc's in full every month, and I don't want to start having to pay interest now.  The only reason that I bought this camera was because I figured it was essentially a 0% loan that I can have paid off in like 2-3 months, but I guess to make things simpler I should have just used this card solely for BT's and not for purchases as well. 

[barbaralee]

Min payment is applied to the HIGHEST APR first, per new cc laws.

[barbaralee]

I just reread your question and I have more to say on that... please bear in mind this is my own experience with the bank I work for... NFCU may be different and so I would check with them:

A gentleman I recently spoke with was upset because he had been charged interest. He had a BT with a 2.9% promo on his card, and had made a regular purchase on the card. Before he made the purchase he spoke with a rep who assured him he would not be charged interest as long as he pays enough to cover the regular purchase.

This was completely wrong. If there is a balance being rotated on the card any new purchases will be charged interest... basically the grace period you see with regular purchases is forfeited. So the gentleman was not only charged the interest with the promo, but was also charged interest on his regular purchase at his normal rate. It was only like $1.07, and I ended up waiving it, but still.

For my bank payment allocation goes something like this:

1) highest interest/fees first

2) balance, which is split between regular and BTs/Cash advances, etc...

If you have a card for a BT I would encourage to use it for nothing more than a BT. It is a nusance for the crad holder expecting a payment to go solely to their BT but they've put thousands of dollars worth of purchases on the card, which have priority.

[MarineVietVet]

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@barbaralee wrote:

Min payment is applied to the HIGHEST APR first, per new cc laws.

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Just a slight addition to this. Any amount above the minimum payment is applied to the highest interest rate first.

From a BK years ago to:
EX - 3/11 pulled by lender- 835, EQ - 2/11-816, TU - 2/11-782

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

[ChesterPDexter]

Hey, this is an old thread and I'm sorry if it's bad form to dredge up old ones (people seem to be reprimanded or at least to have it pointedly pointed out if they do that), but this person asked pretty much what I was going to ask.  It's not like the topic is time-sensitive or anything - well, yes, it is, but it has to do with laws that have been in effect since sometime last year.  I wanted some clarification on what was just said.

Any amount above the minimum goes to highest APR first, but what does the minimum go toward?

I know not to mix BTs with purchases (it's a headache I'd rather avoid) but here is why I am asking:

I have a card with a 0% BT that runs out next summer, and another 0% BT on the same card  that runs out next December.

So, next summer when one balance starts charging regular interest but the other balance is still on 0%, I'm curious as to how my minimum payment (and also any amount over the minimum, IF I am able to pay more) will be allocated.  Does anyone know the answer to this?

[haulingthescoreup]

Gotta run, and I don't want to post about how the payments are applied without being really sure first, but as to the digging up old posts thing, we usually point that out to noobs who pull something up by the search feature. Unfortunately, the search feature likes to pull up really old stuff, and things have often changed from what was on there before (rewards, qualifying, etc etc), so we try to point it out. You'd be startled at how many people don't notice the date on a thread, and there'll be lots of new posts saying But wait a minute, I thought they changed the AF to something something.

Nothing wrong with digging up oldies as long as everyone realizes that they're oldies.

IIRC, the way that payments go is that each set (the 0% and the 10%) of payments gets the minimum applied, and any extra goes to the higher APR. (It used to be the reverse.) But someone please come in and clarify this!