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? about 0% on purchases for 12 mos and 0% on balance transfers for 21 mos?

Regular Contributor

? about 0% on purchases for 12 mos and 0% on balance transfers for 21 mos?

I'm specifically referring to Citi's Diamond Preferred Card.

 

If I do balance transfers from another credit card to the Citi card but also make purchases on the CIti card during that time, how will payments be applied when the 12 mos runs out for new purchases and I still have a balance? At that point, I will still have 11 months of 0% interest remaining for balance transfers. Are my payments applied to the outstanding balance on the charges that incur interest or are my payments applied to the 0% interest balance first? I know what's more lucrative for the bank Smiley Very Happy This may be a dumb question but I thought about it earlier and I could not reconcile it in my brain.

 

I hope I'm making sense. When I think about it this way, it makes the balance transfer offer sound gimmicky unless I ONLY transfer balances and use another card for new charges. 

Message 1 of 13
12 REPLIES
Valued Contributor

Re: ? about 0% on purchases for 12 mos and 0% on balance transfers for 21 mos?


soliloquy wrote:

I'm specifically referring to Citi's Diamond Preferred Card.

 

If I do balance transfers from another credit card to the Citi card but also make purchases on the CIti card during that time, how will payments be applied when the 12 mos runs out for new purchases and I still have a balance? Don't have a balance) At that point, I will still have 11 months of 0% interest remaining for balance transfers. Are my payments applied to the outstanding balance on the charges that incur interest or are my payments applied to the 0% interest balance first? I know what's more lucrative for the bank Smiley Very Happy This may be a dumb question but I thought about it earlier and I could not reconcile it in my brain.

 

I hope I'm making sense. When I think about it this way, it makes the balance transfer offer sound gimmicky unless I ONLY transfer balances and use another card for new charges. 


I'm not being a wise guy, I just don't know the answer either, so my best answer is to not have a balance at the time the intro 0% APR runs out.

 

Very good question tho, I'm looking forward to the answer.


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Message 2 of 13
Regular Contributor

Re: ? about 0% on purchases for 12 mos and 0% on balance transfers for 21 mos?

Smiley Happy I thought that too...you are right. The easy thing to do would be not to have a balance when the offers expires. Still, I hope for someone that can provide insight on this issue. Thanks! Smiley Very Happy

Message 3 of 13
Valued Contributor

Re: ? about 0% on purchases for 12 mos and 0% on balance transfers for 21 mos?


soliloquy wrote:

Smiley Happy I thought that too...you are right. The easy thing to do would be not to have a balance when the offers expires. Still, I hope for someone that can provide insight on this issue. Thanks! Smiley Very Happy


Smiley Very Happy

 

Believe me, someone here knows the answer, I've learned alot since I've joined, but, this is not one of the things I've learned, so I'm as interested as you to see the answer.


Starting Score: 583
Current Score: 3-03-12-EQ-802 TU-806 EX-798 (EQ Beacon 9: 804 Lender Pull 3-08-12) All FICO's
Goal Score: 800+ across all three

Take the FICO Fitness Challenge


Message 4 of 13
Frequent Contributor

Re: ? about 0% on purchases for 12 mos and 0% on balance transfers for 21 mos?

You need to look at the terms and agreement of the card you are applying for.

Every credit card may have specific criteria, thus there is not one correct answer.

 

With many companies in the PAST, if you had a card that only had 0% interest on transfers and you had to pay interest on new purchases that did not have a 0% introductory rate, the issuer  would apply the payment to the lowest rate first (which would be the 0% tranfers). Then you still get stuck accruing interest on the new purchase. Of course, your situation is different because you have both 0% on transfers and 0% on new purchases.

 

There were some companies that allow you to allocate where you want the payment applied.

 

I am not sure if anything has changed regarding where payments are applied with the new credit laws. This needs consideration.

 

I would call the issuer, and get the specific details about the card directly from the horses mouth. Different cards could and often do have different terms. It all comes down to the card agreement.

Message 5 of 13
Frequent Contributor

Re: ? about 0% on purchases for 12 mos and 0% on balance transfers for 21 mos?

PS....

 I always recommend NOT making new purchases on a card you are using for balance transfers. Best to pay off the transfers to ZERO, then you can use your card. Just my 2 cents. You don't have to take that advice. LOL

 

 

But I will caution and reiterate again.....the terms of each card can differ, so it would be important to call the issuer about the specific card you are looking at. 

Message 6 of 13
Senior Contributor

Re: ? about 0% on purchases for 12 mos and 0% on balance transfers for 21 mos?

My understanding is that by law,  Any money paid above the minimum payment must be applied to the highest interest rate balance.   

 

So after the 12 months, you should be ok if you pay the minimimum payment plus all purchase charged each month.

 

Should be OK if you know what you are doing and watch carefully.

 

 

Message 7 of 13
Frequent Contributor

Re: ? about 0% on purchases for 12 mos and 0% on balance transfers for 21 mos?

I just did some research on the new credit laws. Wolf is correct.


The Credit CARD Act requires above-the-minimum payments to be applied first to the credit card balance with the highest interest rate

 

 

So the law did change with respect to this....this is obviously protects the consumer. This was a good change.  As indicated in my post, that was the old way they did things.  I had a feeling the new laws may have had something to say about this practice. I am glad to see this.  

 

The only question that remains in my head is, where does the payment get applied if you are only paying the minimum? I would still check the terms of the card agreement.


Message 8 of 13
Regular Contributor

Re: ? about 0% on purchases for 12 mos and 0% on balance transfers for 21 mos?

Thank you! I see that now.

 

http://www.federalreserve.gov/consumerinfo/wyntk_creditcardrules.htm

 

Well I have just a small balance on that card so I'm going to pay it off because I do the balance transfer and just not use that card until it's paid off.

Message 9 of 13
Regular Contributor

Re: ? about 0% on purchases for 12 mos and 0% on balance transfers for 21 mos?

Oooooooooooooh. I'm annoyed. Citi won't let me pay my 600 balance because I just charged it a week ago and there is currently not a statement balance due. Unbelievable!

Message 10 of 13