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Payments toward Balance Transfers and Payments on the same card

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go_FICO_self
Frequent Contributor

Payments toward Balance Transfers and Payments on the same card

Suppose you have balance transfer and make purchases on the same card. Can you control where the payment goes towards? I think in the past if you had balance transfer and purchases on the same card, and made payments, the card company could decide which one to apply the payment to. And as they would usually deduct it off your promo balance transfer amount, and let your purchase accruse standard APR interest.

Is that still the case now?

Message 1 of 13
12 REPLIES 12
Anonymous
Not applicable

Re: Payments toward Balance Transfers and Payments on the same card

I was looking at Discover BT rules and it appeared that yes that is the case for Discover.  You'd have to pay your BT to zero before any payments would go toward other balances including new and old purchases.  So having 0% on purchases while doing a BT seems to be the best idea.  Check each lenders rules of course but I think this is still standard procedure.

Message 2 of 13
Anonymous
Not applicable

Re: Payments toward Balance Transfers and Payments on the same card

There's a long thread about this, it's about two or three weeks back. I don't know what to search on, but you can scan titles going back, or maybe someone will have a link. 

 

I didn't go through the whole thread, but I think it was being said the same as you're saying about Discover. However I thought that wasn't the case with the CARD act. I thought with the card act your minimum payment had to apply to the lowest APR (or oldest balance or something that effectively pays a 0% if you have one), THEN after that it would go to your highest APR. But again, that's off the top of my head and I could be wrong. 

Message 3 of 13
core
Valued Contributor

Re: Payments toward Balance Transfers and Payments on the same card

All of the cards I've received in the last several months have said that payments get applied to your highest rate first.  They of course wouldn't do this if it wasn't required by law.  Is there a specific card (or company) you are asking about?

Message 4 of 13
go_FICO_self
Frequent Contributor

Re: Payments toward Balance Transfers and Payments on the same card


@core wrote:

All of the cards I've received in the last several months have said that payments get applied to your highest rate first.  They of course wouldn't do this if it wasn't required by law.  Is there a specific card (or company) you are asking about?


hmmm....that's great if that's the case! the card in question is discover. got a good balance transfer offer. but also want to keep using 5% categories. how to make sure it'll apply to purchases first?

Message 5 of 13
go_FICO_self
Frequent Contributor

Re: Payments toward Balance Transfers and Payments on the same card

Upon further review, that's not the case:

 

Can I avoid interest on purchases if I transfer a balance?

 

 

You cannot avoid interest on new purchases you make unless you pay your entire balance in full each month. This means that unless you have a 0% introductory purchase APR, you will pay interest on new purchases if you do not pay the balances you transfer in full by the first payment due date.

See your Cardmember Agreement for details.

Message 6 of 13
onstar
Established Contributor

Re: Payments toward Balance Transfers and Payments on the same card


@Anonymous wrote:

There's a long thread about this, it's about two or three weeks back. I don't know what to search on, but you can scan titles going back, or maybe someone will have a link. 

 

I didn't go through the whole thread, but I think it was being said the same as you're saying about Discover. However I thought that wasn't the case with the CARD act. I thought with the card act your minimum payment had to apply to the lowest APR (or oldest balance or something that effectively pays a 0% if you have one), THEN after that it would go to your highest APR. But again, that's off the top of my head and I could be wrong. 


Here's a thread from last week.

http://ficoforums.myfico.com/t5/Credit-Cards/BT-while-using-active-card/td-p/4113131

 

As for your bolded part, that is how I understand the CARD act also. But there's an exception where in the last 2 months of the promo period, all funds get applied to the promo balance (so that the promo balance gets paid off quicker). I know with many (all?) of the Synchrony cards, you can choose how your payment are applied. Here's the selection screen from Amazon Store card:

 

synchrony.png

BK DC 4/9/2018
FICO 08 (4/9/2018): EQ 647 EX 609 TU 620
FICO 08 (10/16/2020): EQ 676 EX 659 TU 653
Message 7 of 13
go_FICO_self
Frequent Contributor

Re: Payments toward Balance Transfers and Payments on the same card


@onstar wrote:

Here's a thread from last week.

http://ficoforums.myfico.com/t5/Credit-Cards/BT-while-using-active-card/td-p/4113131

 

 


Thanks for the link! looks like varies by card, and discover is in the stingy category.

Message 8 of 13
onstar
Established Contributor

Re: Payments toward Balance Transfers and Payments on the same card


@go_FICO_self wrote:

@onstar wrote:

Here's a thread from last week.

http://ficoforums.myfico.com/t5/Credit-Cards/BT-while-using-active-card/td-p/4113131

 

 


Thanks for the link! looks like varies by card, and discover is in the stingy category.


That may need further research. I know that the TERMS of the BT says:

To avoid interest on new purchases after you transfer a balance, you must pay all balances on your account, including any balances you transfer under this offer, in full by the first payment due date.

 

I don't think they really charge you interest. And I don't think that's enforceable under the CARD Act. I've done BT with Barclay with similar wording on the BT. I made a $4.39 coffee purchase. I had no other charges during the statement period. On t\he next statement, the minimum payment due was $25.00. But the statement also said that I had to pay $48.48 to avoid paying any interest (Barclay is cool like that; they'll tell you exactly how much you need to pay to avoid interest). I don't know why the payment due wasn't $29.39 to avoid interest ($25 minimum due + $4.39 new purchase), and I didn't really care at the time, and I paid like $100 just to be safe.

 

Anyway, you should do more research on Discover, on BT, on CARD Act. Then let us know! Smiley Happy

BK DC 4/9/2018
FICO 08 (4/9/2018): EQ 647 EX 609 TU 620
FICO 08 (10/16/2020): EQ 676 EX 659 TU 653
Message 9 of 13
steel_string
Regular Contributor

Re: Payments toward Balance Transfers and Payments on the same card

There's one set of terms that tells you how payments are applied and another that tells you when you lose your grace period and pay interest on new charges.
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Message 10 of 13
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