Can anyone help me understand how payments are applied to a credit card that has the following (Citi Simplicity):
0% APR for 21 months on balance transfers
0% APR for 12 months on purchases
Let's say I transfer a balance of $2000 to the card. Then, I use the card to make a purchase of $300. When I make my first monthly payment (say $200), how is it applied? Does it apply to the purchase balance, the BT balance, or is it split between both? I read through my card agreement but I could not find any breakdown of this.
Before I make any purchases with this card, I want to make sure that I'm not going to effectively reduce the 0% APR months I have on the BT to 12 months by making a purchase on the card. I hope what I'm asking makes sense!
Gardening as of 1/15/2024
@bluetomorrow wrote:Can anyone help me understand how payments are applied to a credit card that has the following (Citi Simplicity):
0% APR for 21 months on balance transfers
0% APR for 12 months on purchases
Let's say I transfer a balance of $2000 to the card. Then, I use the card to make a purchase of $300. When I make my first monthly payment (say $200), how is it applied? Does it apply to the purchase balance, the BT balance, or is it split between both? I read through my card agreement but I could not find any breakdown of this.
Before I make any purchases with this card, I want to make sure that I'm not going to effectively reduce the 0% APR months I have on the BT to 12 months by making a purchase on the card. I hope what I'm asking makes sense!
When there are 2 different balances, each with the same interest rate, there's no law or regulation specifying how the payments are applied. So you would have to talk to the bank and ask. And in asking the question you need to differentiate between minimum payments, and payments over the minimum, because there might be a different protocol for each.
A good bank would apply excess payments to the balance which is going to have the earlier expiration of the promo rate. In my experience Discover does it that way.
I have no experience with Citibank balance transfers.
Personally, my practice with all lenders is to simply not mix purchases and balance transfers on the same card.
If you do use both, my advice would be to just assume the worst, because even after talking to a CSR you won't necessarily have the correct information.
@SouthJamaica wrote:
...Personally, my practice with all lenders is to simply not mix purchases and balance transfers on the same card.
If you do use both, my advice would be to just assume the worst, because even after talking to a CSR you won't necessarily have the correct information.
Solid advice - thank you! That's the way I'm leaning as well. I will try to get ahold of a CSR on Monday and see if they can give me any information, but like you said, it's probably best to expect the worst.
@bluetomorrow wrote:
@SouthJamaica wrote:
...Personally, my practice with all lenders is to simply not mix purchases and balance transfers on the same card.
If you do use both, my advice would be to just assume the worst, because even after talking to a CSR you won't necessarily have the correct information.
Solid advice - thank you! That's the way I'm leaning as well. I will try to get ahold of a CSR on Monday and see if they can give me any information, but like you said, it's probably best to expect the worst.
Yeah and what I omitted from my previous post is that Citibank is one of the last institutions I would trust to 'do the right thing' 
@TiggerDat wrote:
@SouthJamaica wrote:
@bluetomorrow wrote:Can anyone help me understand how payments are applied to a credit card that has the following (Citi Simplicity):
0% APR for 21 months on balance transfers
0% APR for 12 months on purchases
Let's say I transfer a balance of $2000 to the card. Then, I use the card to make a purchase of $300. When I make my first monthly payment (say $200), how is it applied? Does it apply to the purchase balance, the BT balance, or is it split between both? I read through my card agreement but I could not find any breakdown of this.
Before I make any purchases with this card, I want to make sure that I'm not going to effectively reduce the 0% APR months I have on the BT to 12 months by making a purchase on the card. I hope what I'm asking makes sense!When there are 2 different balances, each with the same interest rate, there's no law or regulation specifying how the payments are applied. So you would have to talk to the bank and ask. And in asking the question you need to differentiate between minimum payments, and payments over the minimum, because there might be a different protocol for each.
A good bank would apply excess payments to the balance which is going to have the earlier expiration of the promo rate. In my experience Discover does it that way.
I have no experience with Citibank balance transfers.
Personally, my practice with all lenders is to simply not mix purchases and balance transfers on the same card.
If you do use both, my advice would be to just assume the worst, because even after talking to a CSR you won't necessarily have the correct information.
Actually, there is a law.... Whatever has the higher interest rate gets the overpayment applied to it....
Tricky to this though... Since it is technically 0% for both, but the balance transfer might have a higher rate after the time period....
The aspect of the law in question has to do with the fact that they don't want banks applying the overpayment to the lower interest amount to simply make more money off you. So, when you do a balance transfer they are allowed to charge interest on the new purchase from the moment you make the purchase, since you already have a revolving amount, but if you over pay the minimum, they have to apply the overpayment to the higher interest rate portion. So, if you do use a card for purchases while you have a balance transfer, it is best to pay for the new purchases plus a little more to cover the interest and the minimum due amount.
The law does not speak to 2 different balances with the same interest rate.
@SouthJamaicanailed it, especially
@SouthJamaica wrote:
. . . even after talking to a CSR you won't necessarily have the correct information.
The rep you speak with on the phone may not be trained in the fine details of how your payments are applied. It will be difficult to determine if he or she understood your question, let alone whether you are talking to someone who knows the correct answer, or how to navigate through their system to find the person who knows the answers.
I'd suggest keeping your balance transfer and your spending on separate cards or plan to have the whole thing paid in full before the 12 months is up.
EQ8 778, TU8 764, EX8 772 as of July 3
As @SouthJamaica correctly stated, the Credit CARD Act does not address balances with different terms but equal interest rates. When having two or more balance transfer promotional balances with different end dates, my experience has been that Citi uses the consumer-friendly method of applying payments to the balance with the earliest expiration date. It is likely that they would treat a promotional APR on new purchases the same way, but unless someone has tested this exact scenario it's unlikely you'll get a definitive answer without testing it yourself over a few statement cycles after making a small purchase while having an existing balance transfer.
