Paying off highest interest first?

missk_ensington

Hi everyone,

Just a quick query - I was always under the impression that if you had a credit card and part of the balance was at 0% and part at say 18%, that the credit card company would allocate your payment to the cheapest debt first....

But Im just reading my HBOS statement and it says payments will be allocated to the higher interest rate first.

So my question is, has it always been like this and I am just mistaken, is it a new ruling that I didnt know about, or is it just unique to HBOS?

notanewuser

missk_ensington wrote: »

Hi everyone,

Just a quick query - I was always under the impression that if you had a credit card and part of the balance was at 0% and part at say 18%, that the credit card company would allocate your payment to the cheapest debt first....

But Im just reading my HBOS statement and it says payments will be allocated to the higher interest rate first.

So my question is, has it always been like this and I am just mistaken, is it a new ruling that I didnt know about, or is it just unique to HBOS?

New ruling.

missk_ensington

I just noticed in the summary box it says "If you don't pay your balance in full we will allocate payments to balances with the highest interest rate before balances with with lower interest rates".

I had avoided using by 0% Balance Transfer offer for fear that the £2,000 of debt at 20% would never get touched by the repayments, and the £1200 of 0% debt would be where my monthly payment got allocated. Now Ive realised that isnt the case Im wondering if thats the case with all my cards!

grumbler

notanewuser wrote: »

New ruling.

Not that new actually.
I think it was the end of 2010: Credit card lenders forced into fair charges
Published: 15-03-2010

missk_ensington

Thank you very much!