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Hi!
Thought this might be an interesting read from today's news:
http://www.marketwatch.com/story/0-balance-transfers-arent-zero-cost-2013-08-28
Happy Labor Day!
Furthermore, “some companies will apply your monthly payments first to the balance transfer money and then to any new purchases, which will likely result in you paying interest on the new purchases, since your payments aren’t paying those down,” Campbell says.
I don't think that's true. I thought the CARD Act expressly prohibits companies from doing this anymore. Payments go to highest interest rate balances first.
@Brusilov wrote:Furthermore, “some companies will apply your monthly payments first to the balance transfer money and then to any new purchases, which will likely result in you paying interest on the new purchases, since your payments aren’t paying those down,” Campbell says.
I don't think that's true. I thought the CARD Act expressly prohibits companies from doing this anymore. Payments go to highest interest rate balances first.
In my experience, they did pay down the 0% offer first, despite the CARD Act. They justified it by saying that the 0% promo balances have regular interest rates greater than or equal to the new non-promotional charges. The fact the balance were currently at 0% didn't matter to them since it was just temporary. I'm not sure that congress or the CFPB has blessed this logic, but that's what BOA is doing, at least... using the non-temporary APR instead of the APR for the most recent statement, or upcoming statement for ranking which card to pay down first (which works out in the bank's favor, not the consumer's).
I believe that MarketWatch is correct because we know the banks' present reputations are less than stellar.
I shared my original link as these forums have helped me so much I wanted to do a little giving back.