I have a stupid question

[Anonymous]

Hi everyone, excuse my dumb question which may be common knowledge but I am fairly new to using credit cards

I purchased something with a store card with a 2 year no interest promotion. My minimum payment is the purchase/24 months so If I keep paying the minimum I should finish before the promotional period ends

Now what happens if

1. I purchase something else on the same card that has no promotion: What is my payment going to be for that cycle

2. I purchase something else with a different promotion (Say 6 months no interest). What will happen to my minimum payment and how do I make sure I don't get charged interest. What if payments I make go towards one purchase and not the other

Sorry If I am not very clear English is not my native language.

I appreciate any info on this topic (multiple purchasees and how payments are assigned) I tried google couldn't come up with anything useful

[haulingthescoreup]

Hi, welcome to the forums!

Take a look at one of your statements. Somewhere in there, you'll see a section (probably set apart in a box) that lists the different APR's in effect for different purchases. You should see your initial purchase with 0.00%, and then there will be another line saying something like "new purchases at 17.99%", or whatever your card's rate is.

You should probably call customer service to get the complete breakdown for each scenario, including the minimum payment.

A note about minimum payments: it is generally a terrible idea to only make the minimum payment. Banks often take this as an indicator that you are broke, and that all you can afford is the minimum. Of course, when it's a 0% APR rate, it makes more sense, but even then, lenders have been known to take what we call "adverse action" --reducing your credit limit, etc. I don't know how much you financed, but I'd advise paying more like double the minimum, even if it means that you aren't stretching your repayment over the full 2 year period. And if you make additional purchases after the intro 0% period is over, they will generally have awful APR's.

If nothing else, if you use your card for additional non-0% purchases, I would advise that you plan to pay them off immediately, or over a 3-month period at the most. And be sure to have enough money in savings that you can pay all balances off on very short notice. If your bank does start reducing your credit limit, your card will appear maxed out, and that will hurt your credit profile and your FICO scores.

[Anonymous]

Thanks for the reply Haulingthescoreup.

So if I understood this correctly. Anyone who takes a 0 interest offer on a card should avoid using that card to buy anything else until the balance is paid in full? Say if I wanna purchase something else from Amazon. I should use another card for the purchase and not charge it to my amazon card, right?

The card is amazon btw and the purchase is 909/3200 CL

Thanks again

[haulingthescoreup]

Not necessarily. The Credit Card ACT now requires that lenders apply your payments (if they're big enough) to all your balances. It used to be that they'd apply all the payment to the lowest APR balance, and let the high APR balances sit there month after month, merrily accruing interest charges. But now, if you pay more than the combined minimums on all balances, they have to let you apply an extra to whichever account you wish.

For instance, if your minimum payment on a 0% APR balance is $40, and your minimum on a 17.99% APR balance is $30, and you make a payment of $100, they're supposed to apply $40 to the first, $30 to the second, and then the remaining $30 to whichever account you request.

This is also true of BT's.

I hope to heaven that I'm saying this right. I don't carry balances, other than the occasional BT, so I don't have personal experience with the actual ins and outs of how much money goes where. But when I called yesterday for the payoff figure on a BT (which also had a separate purchase), the BofA CSR did mention that we can now make payments on multiple balances.

Someone please rescue me if I've made this even more confusing, or if I've got it wrong!

[wmarat]

Though CCC must differentiate purchases and apply APR only to non promotional purchases, I would not count on it.

For example.

I have 0%BT on my Citi card, also I have automatic charge on this card. I make 2 payments. First is for automatic charge and second is 1/6 of mine BT which is 20 times of minimal payment. Every month I got charged $0.50 financial charge, and every month I have to call CSR and have them credit $0.50 back.

So, use card for promotional and anything else.

Good Luck.

[Anonymous]

This is a very difficult question and there is probably some variance among lenders in how it works.  I suggest you call the credit card company. 

I am not an expert, but my understanding is a little differrent.

The minimum portion of the payment goes toward the lenders choice (generally lowest APR) and the rest of payment goes to highest APR (not a choice).   

There is an exception for promotions which run out and charge back interest.    Then the extra payment goes toward the promotion balance in the last 2 months before it expires.   So if you understand how it works, you should be able to avoid the interest. 

However, I suggest you don't put normal charges on the promotion card if you don't need to.   IMO, it is not worth the trouble, if the CC companies does it wrong.