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

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Valued Member

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

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.  

Message 11 of 14
Valued Member

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


@debtguy3939 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. 

Message 12 of 14
Valued Member

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


@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

Message 13 of 14
Super Contributor

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

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.
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Message 14 of 14
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