BOA Cash Advance balance not getting paid down?

Winchester2005 · ‎11-28-2021

This might be a multi pronged question...

So I just got through a nightmare scenario with an ex where I had to pretty much put a bunch of expenses on my boa card since we had a joint mortgage and had to get my name off of it (appraisal expenses/paying down her debt so she could get approved solely), that resulted in my boa card nearly being maxed (15038/16000). It's down to about 13800 now after few months of paydown.

I've been paying down as much as I can (I chose the 3 yr amt that was on my first statement since all the expenses are done now of 584/mo).

Obv, I notice as I pay it down the overall avail credit is becoming avail, but the amt available for cash is still at 0 (had to advance all of it like 8000 to pay off an auto loan of hers....like I said, nightmare scenario). So that got me to look at the statements a bit closer.

One weird thing I noticed is the purchase amount on the statement (with a lower apr) is going down, but the cash advance amt (higher apr) is not.

What's weird is I thought it was law after payments go to fees/interest charges, it then goes to highest apr balances?

Oct statement: 5973.63 purchase balance, apr 20.99. 8396.94 cash advance balance, apr 24.99.

Did a 584 payment.

Nov Statement: 5621.55 purchase balance, same apr. 8398.71 cash advance balance, same apr.

I would have thought that the majority of my 584 payment after interest would have gone towards cash advance balance?

After I get this sucker down more, it will all be moot since I'll do a balance transfer, but just curious why the higher apr isn't getting paid down as I thought that was a requirement card issuers had to abide by.

K-in-Boston · ‎11-28-2021

Only the amount of your payment after fees, interest, and the minimum payment must be applied to the portions of your balance with the highest APR. Keep in mind that the balances you see reflected there are the balances that accrued interest daily during your statement cycle and will not reflect your actual balance at the time the statement was generated. If you are using the "If you pay.." information on your statement for 3 years, the payments are going to be only slightly above the minimum payment due. If you make substantially larger payments than the minimum payment you will see the cash advance balance at the higher APR come down faster, but what is shown next to the interest accruals will depend on what the previous balance was, the amount of payment that got applied to each of the balances, and when in your statement cycle the payment(s) was/were made. To make the biggest dent, you'll need to make larger payments and make the payment as early as possible after statement closing as the closer the payment is made to the due date, the more interest will accrue.

Anonymous · ‎11-28-2021

@Winchester2005 wrote:
This might be a multi pronged question...
So I just got through a nightmare scenario with an ex where I had to pretty much put a bunch of expenses on my boa card since we had a joint mortgage and had to get my name off of it (appraisal expenses/paying down her debt so she could get approved solely), that resulted in my boa card nearly being maxed (15038/16000). It's down to about 13800 now after few months of paydown.

I've been paying down as much as I can (I chose the 3 yr amt that was on my first statement since all the expenses are done now of 584/mo).

Obv, I notice as I pay it down the overall avail credit is becoming avail, but the amt available for cash is still at 0 (had to advance all of it like 8000 to pay off an auto loan of hers....like I said, nightmare scenario). So that got me to look at the statements a bit closer.

One weird thing I noticed is the purchase amount on the statement (with a lower apr) is going down, but the cash advance amt (higher apr) is not.

What's weird is I thought it was law after payments go to fees/interest charges, it then goes to highest apr balances?

Oct statement: 5973.63 purchase balance, apr 20.99. 8396.94 cash advance balance, apr 24.99.
Did a 584 payment.
Nov Statement: 5621.55 purchase balance, same apr. 8398.71 cash advance balance, same apr.

I would have thought that the majority of my 584 payment after interest would have gone towards cash advance balance?

After I get this sucker down more, it will all be moot since I'll do a balance transfer, but just curious why the higher apr isn't getting paid down as I thought that was a requirement card issuers had to abide by.

Based on your $14,000 balance your monthly interest appears to be just under $350 a month. You are paying $584 per month which leaves approx $234 a month going towards principal. It also appears that the bank is applying that $234 a month to your purchase balance. Even if they applied some of it to your advance balance it would still not make much of an impact at all since the rate is not that much of a spread if you divide it by 12 months.

You need to read your credit card disclosure. It just may say that they can apply these payments first to your purchase balance and have you carry the advance balance. I am quite sure that this is what is going on. That interest is staggering to say the least. If you do have a BT offer from another bank for a 0% rate for even 12 to 18 months it will give you some breathing room to bring the balance down before the standard rate once again kicks in.

Thanks

Mark

difringe · ‎11-28-2021

@Winchester2005 wrote:
This might be a multi pronged question...
So I just got through a nightmare scenario with an ex where I had to pretty much put a bunch of expenses on my boa card since we had a joint mortgage and had to get my name off of it (appraisal expenses/paying down her debt so she could get approved solely), that resulted in my boa card nearly being maxed (15038/16000). It's down to about 13800 now after few months of paydown.

I've been paying down as much as I can (I chose the 3 yr amt that was on my first statement since all the expenses are done now of 584/mo).

Obv, I notice as I pay it down the overall avail credit is becoming avail, but the amt available for cash is still at 0 (had to advance all of it like 8000 to pay off an auto loan of hers....like I said, nightmare scenario). So that got me to look at the statements a bit closer.

One weird thing I noticed is the purchase amount on the statement (with a lower apr) is going down, but the cash advance amt (higher apr) is not.

What's weird is I thought it was law after payments go to fees/interest charges, it then goes to highest apr balances?

Oct statement: 5973.63 purchase balance, apr 20.99. 8396.94 cash advance balance, apr 24.99.
Did a 584 payment.
Nov Statement: 5621.55 purchase balance, same apr. 8398.71 cash advance balance, same apr.

I would have thought that the majority of my 584 payment after interest would have gone towards cash advance balance?

After I get this sucker down more, it will all be moot since I'll do a balance transfer, but just curious why the higher apr isn't getting paid down as I thought that was a requirement card issuers had to abide by.

Your card agreement will tell the tale, but I am under the impression that payments are actually applied to the lowest APR first, and cash advances typically have the highest APR of any credit card transaction.

K-in-Boston · ‎11-28-2021

@Anonymous wrote:
You need to read your credit card disclosure. It just may say that they can apply these payments first to your purchase balance and have you carry the advance balance. I am quite sure that this is what is going on.

@difringe wrote:
Your card agreement will tell the tale, but I am under the impression that payments are actually applied to the lowest APR first, and cash advances typically have the highest APR of any credit card transaction.

That would be a violation of the CARD Act. However, by law only the amount of the payment after fees, interest, and the minimum payment amount must be applied to balances with the highest APR first. Card issuers are free to apply the minimum payment amount in the manner they so choose, and card issuers almost universally choose to apply it to the lowest APR balance first.

Anonymous · ‎11-28-2021

@K-in-Boston wrote:
@Anonymous wrote:
You need to read your credit card disclosure. It just may say that they can apply these payments first to your purchase balance and have you carry the advance balance. I am quite sure that this is what is going on.

@difringe wrote:
Your card agreement will tell the tale, but I am under the impression that payments are actually applied to the lowest APR first, and cash advances typically have the highest APR of any credit card transaction.

That would be a violation of the CARD Act. However, by law only the amount of the payment after fees, interest, and the minimum payment amount must be applied to balances with the highest APR first. Card issuers are free to apply the minimum payment amount in the manner they so choose, and card issuers almost universally choose to apply it to the lowest APR balance first.

That makes sense then. The $584 payment based on the balance is the minimum payment due. So what you are saying since it is the required payment the bank can apply it how they want. Thank you for letting us all know. Knowlege is a great thing and I learn new things every day.

Thanks

Mark

K-in-Boston · ‎11-28-2021

Probably just a little over since op said they were using the amount from the "if you pay this amount it will take you 3 years and you will pay this much interest" box. Minimum payments are usually only very slightly less but often get into the 20+ year range with high APR cards.

It likely got lost in the wall of text I posted in my first post in this thread, but it's important to remember that when you are carrying a balance with interest, the balances shown in the interest computation boxes lower down on the statement are not equal to the current balance on the card, but rather the average daily balances to which interest was applied. As long as a payment was made and no new charges or penalties were added, the actual current balance will be lower than what is shown in those boxes and again making payments soon after the statement closing rather than closer to the due date will slightly lower the average daily balances to which that interest is applied. If OP made the $584 payment close to the due date just a few days before that November statement closing, that payment is barely reflected in the November totals but will be reflected on the December statement for interest calculation.

Anonymous · ‎11-28-2021

@K-in-Boston wrote:
Probably just a little over since op said they were using the amount from the "if you pay this amount it will take you 3 years and you will pay this much interest" box. Minimum payments are usually only very slightly less but often get into the 20+ year range with high APR cards.

It likely got lost in the wall of text I posted in my first post in this thread, but it's important to remember that when you are carrying a balance with interest, the balances shown in the interest computation boxes lower down on the statement are not equal to the current balance on the card, but rather the average daily balances to which interest was applied. As long as a payment was made and no new charges or penalties were added, the actual current balance will be lower than what is shown in those boxes and again making payments soon after the statement closing rather than closer to the due date will slightly lower the average daily balances to which that interest is applied. If OP made the $584 payment close to the due date just a few days before that November statement closing, that payment is barely reflected in the November totals but will be reflected on the December statement for interest calculation.

You know I never thought of that, but if a balance is carried it becomes "daily interest" so if the OP makes the payment on the "payment due date" then he will have a higher interest payment for that month and even less will go to principal.

I have never carried a balance from month to month so I forgot about all that. But I do remember that as being the case. I have read it in credit card disclosures in the past. So the sooner one makes the payment in that month the less interest they will have to pay that month and more will go to principal. I hope people realize that. If they are going to carry a balance pay the amount as soon or as close to the prior statement cut off date as possible.

Thanks

Mark

PackAttack07 · ‎11-28-2021

You didn't state what the exact minimum payment is and whether you are using this card at all anymore, which are important to know, but by my math they are applying the payment appropriately. They apply the entire minimum payment amount to the lowest APR balance (although it's up to them). They then have to apply excess payments to the highest APR balance; interest is not relevant to that requirement as I understand it. If the new interest charges are the highest APR they'll be paid, but for instance the interest from the 20.99% portion won't get paid until the $8,398 at 24.99% is paid off.

Bank of America's minimum payment calculation is 1% of the balance + any new interest + any amount over your total credit limit (not the cash advance limit). Importantly, while they incorporate the new interest amounts as part of your minimum payment due calculation, they have no obligation (aka won't) to apply any part of your actual minimum payment to that portion. This is why you're not making progress on the cash advance balance.

If you look at the math, the Cash Advance balance @ 24.99% APR is generating over ~2.1% in new interest charges per month; the 20.99% equates to roughly 1.8% per month. That's $175/month for the 24.99%, and call it ~$100 for the 20.99% balance (and decreasing ~$5/month). So using November #'s, 1% of total balance = ~$140 + $175 + $100 = $415 minimum payment - 100% of which goes toward 20.99% balance.

$584 payment - $415 min. = $169 applied toward 24.99% balance... $175 in new interest charge - $169 applied to it means you haven't quite been treading water on the cash advance balance. That said, in the next couple months, you will start to very slowly but increasingly bite into it as your minimum payment goes down and more of the $584 goes toward the 24.99%. You are obviously smart to want to pay the 24.99% down, but the 20.99% is not much better frankly.

Hopefully that explains it all for ya. Now for some unsolicited advice (no pontificating):

Suggestions for you – interest compounding daily at 21%-25% is rough:

Pay your credit card bill IMMEDIATELY after your statement cuts to avoid accruing unnecessary interest.
This is worth an extra $8+ a month to you - ex: if your cycle end date is the 1st, pay $584 on the 2nd of the month instead of the actual due date (let’s say it’s the 26th – that’s 24 fewer days/mo. that the $584 you’re going to pay eventually anyway is sitting there accruing interest)

Explore options for lower APR lending but be careful not to compound your problem. Do you pay your monthly bills w/ a different credit card? If you have the available credit and the discipline, you can essentially make a one-time extra payment iao your monthly bills by putting them on that card for one month starting the day after its statement end date (so you get a full cycle of floating credit) instead of paying directly from checking for things like energy bills, car insurance, TV/internet, etc.. This only works if you aren’t charging your monthly bills and PIF already, are disciplined enough not to overcharge and ensure you pay that other credit card in full by the due date every single month & You have another card that has a decent enough limit to do this.
Determine your real max affordable monthly payment. If the $584 amount was purely from the original 3 year payoff calculation, that's just a starting point (not a bad one though). You don't have to pay >$584 every month necessarily; you can hold it for 1-3 months to in your checking and make one extra payment every 2 months which will go straight to the 24.99% balance.

Good luck

MJ-san · ‎11-28-2021

Ouch. I have been in the position sort of - but I got good at using BT checks to avoid the cash advance charges.

in your situation since the deed is done, it may be worthwhile to look at something like Marcus, Prosper, or one of the other online lenders to save 10-14% interest and really make a dent in that balance. The fastest way you can move that balance the better (I'm assuming that getting a 0% BT is likely out of the question given that card is maxed out and most other CC lenders might get spooked, but depending on scores, who knows?)

good luck on getting back on your feet again!!