Plan of Attack to pay Purchase Promo APR vs. Bal.Xfer APR

[PandaGirl77]

I have a Citi Thank You with $700.50 purchase balance at 0% promo ending 6/1. Recently transferred a balance onto this card for .99% thru 4/2021, that balance is $2899.25.  I mistakenly thought I could get rid of the $700.50 by 6/1 so it doesn't revert to the regular 20.99%. From what I now understand anything above my minimum June payment will only reduce the $2899.25? Do I have to wait until my July payment to exceed minimum by the amount left as the purchase balance to eliminate it? At that point it will be the higher APR (20.99% vs. .99%). Please confirm I'm correct and if there's any alternative plan of attack.  I despise paying more than a penny of interest and avoid it at all costs.  The corona thing has thrown a wrench into my credit card management. Thanks!

[K-in-Boston]

The CARD Act is a federal law that requires card issuers to apply any payment over the minimum payment to the highest interest balance first.  Any payments you make over the minimum will only apply to the 0.99% APR balance, until that balance reaches $0 or another balance is at a higher APR.  In order to prevent paying interest on the 0% promo, you will need to pay the 0.99% balance and the 0% balance in full prior to the expiration of the promo.  Once the promo expires, any payments over the minimum will be applied to the remaining 20.99% balance so paying that off immediately after the end of the promo will greatly minimize the amount of interest you'll pay on that balance. 

Keep in mind that we're not talking about any retroactive interest like getting hit with $260 in deferred interest on a $1000 "12 months no interest if paid in full" purchase on a 26% APR store card; even paying the expired promotional balance a full month later is only going to add up to around $12 in interest on $700 at 20.99% (plus a few dollars for the 0.99% balance).

[PandaGirl77]

I was pretty sure that's how it goes so I appreciate the confirmation. I will be sure to check that purchase balance to pay in full come Julys payment. That's a good thing for me to keep in mind, won't transfer a balance onto a card with significant purchase intro rate balance already on it or make additional purchases on a card that has balance transfer.  I just got in a similar situation with Capital One Savor but they give an interest saver payment option which I like. And now I will not be putting any additional purchases on that one either. This took a long time for me to decipher!!

[dogmeat]

If you are certain that the end of the 0% promotional period for the $700.50 is 6/1 (the end date may be listed on your statement), and assuming your June payment (for your May statement) is applied/processed after 6/1, I see no reason why any amount of your June payment above the minimum payment shouldn't apply to the $700.50 (which would be @Anonymous.99 after 6/1).  In other words, I wouldn't way until your July payment.  You can avoid most of that $12.50 interest by paying the balance of the $700.50 as soon after 6/1 as possible, which is likely to be the case for your normal June payment.

Edit to add: You may want to add an additional $.50 to your payment for each day past 6/1 that you expect your payment to process, to cover the additional daily interest accruing on that $700.50 after 6/1.

[PandaGirl77]

That is great advice. 6/1 is definitely the date the 0% ends. I guess that makes sense since on 6/2 the purchase balance becomes the highest APR, any $ they receive must apply to that once I meet my minimum. My payment due date is the 8th. 

[dogmeat]

Now that I think about it, the accrued interest on that $700.50 after 6/1 probably won't be added to your balance until the day of/before the next statement cuts.  So there's probably no benefit to adding the additional $.50s.  However, your next statement will probably have somewhere in the neighborhood of ~$3 of rolled-over interest on it, that you'll need to take care of in July.  I seem to recall something about the CARD act not allowing "interest on interest when a balance is paid in full," but in this case, you're not paying the entire card balance in full, only a portion of the balance that is (will be) at a higher interest rate.  So it's possible you'll be charged interest on that ~$3 as well, over the course of June.  Keep an eye on your next couple of statements for that.  It's a relatively insignificant amount, but no reason to pay it if you don't have to.