topic Re: How do 0% balance transfers work when continuing to make normal purchases? in Credit Cards

How do 0% balance transfers work when continuing to make normal purchases?

Anonymous — Thu, 17 Jan 2019 02:37:40 GMT

I have never done a balance transfer before until a few days ago. I did 2.

1 to a brand new Amex card that offered 0% balance transfer fee + 0% APR for 15 months.

1 to my Fidelity Rewards 2% Visa that I have had for awhile that I got a 0% balance transfer apr offer until 4/2020.

I have the money to pay them off but I figured at 0% why not let them go for awhile a pay them off more slowely.

But now I am confused exactly how it works. If I continue to use them for regular purchases (which do have a APR if i carried a balance), what do my payments go towards first? Lets say I have a $1000 0% balance transfer balance and I made $357 of regular purchases. If I make a payment of $357 will it go towards the purchases, and my balance transfer balance remains the same and at 0%, or do they apply it to the balance transfer first, meaning I would have to pay everything off to avoid interest?

Thanks for any responces

Re: How do 0% balance transfers work when continuing to make normal purchases?

UpperNwGuy — Thu, 17 Jan 2019 03:03:07 GMT

My advice would be not to use the cards for regular purchases until the zero balance transfers have been paid in full.

Re: How do 0% balance transfers work when continuing to make normal purchases?

Jnbmom — Thu, 17 Jan 2019 03:04:07 GMT

Yes I never use a card for purchases when taking advantage of a BT deal/deals.

I only use that card exclusively for the BT and put no other charges on it.

Re: How do 0% balance transfers work when continuing to make normal purchases?

Anonymous — Thu, 17 Jan 2019 07:04:33 GMT

Thanks for the advice but does anyone care to actually explain how it works if you were to continue using the card? I had this quesiton as well and am curious if anyone has an answer.

Thank you

Re: How do 0% balance transfers work when continuing to make normal purchases?

Anonymous — Thu, 17 Jan 2019 10:18:36 GMT

You dont pay intrest on the balance being transfered untile the promotion period ends but you will be charged intrest on normal purchase made with that card if not paid in full by the end of the billing cycle

Re: How do 0% balance transfers work when continuing to make normal purchases?

Anonymous — Thu, 17 Jan 2019 10:55:18 GMT

The credit card act requires any amount paid above your minimum payment to be applied towards the highest apr on the account. So in your case it would be 0% and let’s just say 19.99%. If minimum payment was $25 and you want to pay off $400 in charges you would want to pay $425 to be safe.

I’m not an expert on that but I do know that’s whatvthe act requires. The issuer might be able to confirm too.

Re: How do 0% balance transfers work when continuing to make normal purchases?

Anonymous — Thu, 17 Jan 2019 11:16:00 GMT

You can keep using amex, not sure about fidelity. Since both purchase and BT apr is 0 on amex, it doesn't matter which one get your payment. If you want to be sure certain balance get payment, you can call amex after payment and ask for "payment redirect".

I would never use a BT card for purchases when BT is not paid off, unless the purchase APR is also 0.

I learned a hard lesson from citi DC, when I used its BT offer, the BT off invalidated the default "payment grace period" offer (this statement is printed on the back of the letter and I never read it), which means whatever purchase I made immediately iccur interests. According to Citi, as far as I understand, my only solution for avoid interest is PiF BT and purchase right away.

I later made complaints to CFPB and twitter (lol), and they credited the interest back and I moved all my balance to cap 1, whose BT offer didn't have the crap citi had.

I am not sure if this is the same with fidelity, you want to check your offer's agreement carefully.

Re: How do 0% balance transfers work when continuing to make normal purchases?

AverageJoesCredit — Thu, 17 Jan 2019 12:04:34 GMT

Agree with others on the not using a card with bt as it can get complicated. I know some cards state that if you put on charges after the bt that those and entire balance have to paid in order to not get interest acrued or something to that nature. I may be wrong and apologize if so. Ive seen that language for inst as nce on Penfed and somewhere else i cant remember.

Re: How do 0% balance transfers work when continuing to make normal purchases?

steelers1 — Thu, 17 Jan 2019 14:51:18 GMT

This is where Capital One shines compared to other issuers.

They have a section on their statements that is called "Interest Savers Amount". It is the total amount that you need to pay by your due date to avoid interest. This is particularly nice when part of your balance is part of a 0% promotion.

I know for my Amazon store account when I have a promo I always pay the minimum payment due plus all current charges for the statement period and I have never paid interest.

Re: How do 0% balance transfers work when continuing to make normal purchases?

SouthJamaica — Thu, 17 Jan 2019 15:01:20 GMT

@Anonymous wrote:
I have never done a balance transfer before until a few days ago. I did 2.
1 to a brand new Amex card that offered 0% balance transfer fee + 0% APR for 15 months.
1 to my Fidelity Rewards 2% Visa that I have had for awhile that I got a 0% balance transfer apr offer until 4/2020.

I have the money to pay them off but I figured at 0% why not let them go for awhile a pay them off more slowely.

But now I am confused exactly how it works. If I continue to use them for regular purchases (which do have a APR if i carried a balance), what do my payments go towards first? Lets say I have a $1000 0% balance transfer balance and I made $357 of regular purchases. If I make a payment of $357 will it go towards the purchases, and my balance transfer balance remains the same and at 0%, or do they apply it to the balance transfer first, meaning I would have to pay everything off to avoid interest?

Thanks for any responces

My advice is never to use the card you have used for a balance transfer for purchases, because you will wind up losing your grace period and paying interest on the purchases.

Re: How do 0% balance transfers work when continuing to make normal purchases?

Anonymous — Thu, 17 Jan 2019 16:53:34 GMT

Like others have said, it’s best not to use the balance transfer card for normal purchases until the balance transfer is paid in full. I always pay my credit card statements in full, to avoid interest, but I did a 0% balance transfer to Chase. I was surprised to see that any purchase I made on the card immediately started accruing interest even though the only balance I was carrying was the 0% balance transfer. It took two statement periods, and paying off the purchase amounts, to stop interest from accruing. I had incorrectly assumed that as long as I paid off the new purchases in full, plus an additional amount towards the balance transfer, I would not be charged interest.

Had I known that new purchases would accrue interest immediately, I would not have done the balance transfer. It’s my Amazon card, which I use frequently, but I won’t use it until my balance transfer is paid off.

Re: How do 0% balance transfers work when continuing to make normal purchases?

Anonymous — Thu, 17 Jan 2019 18:33:43 GMT

@Anonymous wrote:
The credit card act requires any amount paid above your minimum payment to be applied towards the highest apr on the account. So in your case it would be 0% and let’s just say 19.99%. If minimum payment was $25 and you want to pay off $400 in charges you would want to pay $425 to be safe.

I’m not an expert on that but I do know that’s whatvthe act requires. The issuer might be able to confirm too.

Thank you! This is exactly what I was looking for.

Simply not using both cards like others have answered isnt ideal as in addition to the balance transfers I have spend bonus's to clear.

Re: How do 0% balance transfers work when continuing to make normal purchases?

Anonymous — Thu, 17 Jan 2019 18:33:00 GMT

@AverageJoesCredit wrote:
Agree with others on the not using a card with bt as it can get complicated. I know some cards state that if you put on charges after the bt that those and entire balance have to paid in order to not get interest acrued or something to that nature. I may be wrong and apologize if so. Ive seen that language for inst as nce on Penfed and somewhere else i cant remember.

Thank you! I will have to read the specific fine print for BTs for each card and make sure

Re: How do 0% balance transfers work when continuing to make normal purchases?

NRB525 — Thu, 17 Jan 2019 20:33:07 GMT

It is simpler to not use a card at all if it has a BT going, but if rewards are good enough it can be worth the effort. Also good to understand (by testing) how the bank actually handles the interest, since they all vary.

If you add charges during a BT, my favored method is to pay the minimum payment as soon as the statement prints. This is applied to the lowest APR first.

Then, as you add charges to the card, every few days or weekly, do a sweep payment for an amount slightly over the recent purchases. This payment is applied to the purchases since you already covered the minimum.

Where it gets tricky is how the bank handles “minimum interest “. Some banks like BofA willl allow your payment to zero the Purchase APR amount, and the new month does not trigger a $0.50 or $1.50 minimum interest charge. US Bank, on the other hand, has gotten in a loop when I have tried this in the past. The $1.50 interest during the period, even if paid immediately, triggers another $1.50 the next statement. I had to call US Bank to make it stop.

So there is wisdom in keeping BT separate but it is fun to try out charges as well.