Is interest treated like a purchase?

gglaze

Hi, I am preparing to take advantage of a balance transfer offer on my Citibank Visa, and so I've cleared down the debt on the card. The payment has gone through, and the balance is now 0. However, I am fairly certain that I am going to get a finance charge at the end of this period (a couple of weeks from now) because I have had a rolling balance on the card for the last few periods.

So my question is: Am I right that I need to wait until the end of the period, and then pay off the resulting interest charge to get my balance back to 0, and then I can do my balance transfer? Or am I being overly cautious?

In other words, when I get finance charges on my card due to interest, are those charges treated like any other purchase? Presumably if I let the resulting balance roll, I will get charged interest on that balance? And therefore, if I were to go ahead and do my balance transfer right now, and then have the interest charges applied at the end of the period, future payments would apply to the lower rate balance first (the BT balance) and then to the higher rate balance (the accrued interest). Or is there some rule that says interest is not counted as a purchase, or that interest is not treated like normal balances in that rule of paying off lower rates before higher rates?

And on the same note, even if I wait until the end of the period, pay off the interest, and then do my balance transfer - I am still going to accrue interest on the balance after the balance transfer, because the promo is not at 0%. Therefore, am I right in assuming that I have the same issue, where all of the interest I will be accruing is then becoming a second balance at the higher rate, and therefore as I am making payments, I am always paying off the original balance transfer amount that has the lower rate, while continuing to grow a higher rate balance due to the interest?

Or am I just being paranoid, and it doesn't work like this at all? I'm hoping someone will tell me interest is a special case...

Thanks for your advice!

Milarky

As far as I can see 'interest' will always be paid before any of the promotional balance:

9. All payments we receive from you will (unless otherwise required by law) be applied to your Account in the following order:

9.1 Citi Flex Payments Monthly Instalment (to be applied to each Citi Flex Payment facility in the order of creation);
9.2 other interest and Account Charges;
9.3 existing Promotional Balances – lowest rates first;
9.4 new Promotional Balances – lowest rates first;
9.5 existing Purchase balances and non-promotional Balance Transfers – in the order in which they were debited to your Account as shown on the monthly statement;

...unless it is regarded as a 'purchase' - but in that case it would have to be 'existing' (meaning part of the balance at the previous statement)

It's a toss up and surely hardly worth worrying about (we're talking about the 'interest on the interest' after all which is small change compared to the BT etc)

I assume you are asking here because Citibank Mumbai wasn't very clear if you have asked them?

gglaze

Thanks, I really just wanted a sanity check, and yes exactly right - in fact I wasn't even going to bother with Mumbai this time - based on previous experience, it's not too helpful.