Payments towards balance transfer

altekaka

This probably sounds like a stupid question but, if I add a balance transfer to a credit card on which I have a outstanding balance of purchased items, how do I know whether the payments I make go to the old balance or towards the balance transfer pay-off?

Ebe_Scrooge

Your statement will have a section on the back that details what order payments will be allocated in. But usually payments go against the highest-interest portion of your debt first. So if the balance transfer is at 0% and your purchases are accruing interest, any payment will go to the purchases first.

[Deleted User]

Because the payment will always go to the highest rate balance, as long as it has statemented.

Paul_DNAP

It will be set out in the terms and conditions of the card, but payments should be taken off the portion of the balance that is attracting the higher interest first.

Terry_Towelling

First of all you need to read the T&Cs that relate to your particular card - that will tell you.

Generally, though, CC Companies will first apply payments to the portion of your billed balance that attracts the highest interest rate. If your payments are enough to cover that portion of your balance, then any excess of payments will start to clear the part of your billed balance that has the next highest rate of interest and so on.

Not all card companies apportion payments in the same way, so that's why you need to refer to your own T&Cs.

In your case, if some of your total balance attracts interest and the BT element doesn't, I would expect your payments will be applied firstly to the element that does attract interest.

Please note, any payments you make will only be applied to the balance on your most recent statement. If you have since made purchases that haven't yet appeared on a statement, none of your payments will go towards those until they appear on a statement - or unless you have completely cleared the previous statement balance.

molerat

Which card do you have ? Some actually itemise the different types of balance and you will see statement to statement which one is going down.