Question about how credit card payments are applied

[iamrayl]

Experts,

Let's say I have a 3K balance, 2K of which is at a BT rate of 1.9% and the other 1k is at the purchase APR of 9.99%.  If I make a payment of 1K how is that 1K applied? I'm aware that the lower APR balance is taken care of first but how does the CCC determine how much goes to the lower APR balance and the higher APR balance.  Also does anyone know if there is a calculator online that can calculate this? 

[cobaltnv]

Until the new credit card rules go info effect in 12-18 months my understanding is that 0% will go toward your higher APR balances. Which is why it is not a good idea to make purchases with card you have a BT on. When the new rules go into effect (and some ccc are starting early) I believe the payment get spread evenly by percentage across the various APR balances. In the case you have described 2/3 of you payment would go to the BT 1/3 to the higher APR. 

[marty56]

IMHO all of it goes to the lower interest rate.

[haulingthescoreup]

Yep, that's the current pattern.

That's why people with BT's on their cards get flooded with messages from their banks urging them to go buy something with that card. The bank would love to have a purchase at the standard purchase APR sitting there month after month, accumulating interest, while all your payments go to the lower APR or 0% Apr BT. You don't get any late fees or anything, of course, as long as you're making timely payments on the BT, but boy, does it cost you.

My husband did this once, and by the time he paid the purchase, he'd paid almost as much in accumulated interest as whatever the original cost was.

When I had a BT, I put the card in a drawer and never looked at it.