How is my credit card payment allocated to balances?

by coty.bode , in category: Banking and Credit , 9 months ago

How is my credit card payment allocated to balances?

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1 answer

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by lucienne , 9 months ago

@coty.bode 

When you make a credit card payment, the allocation towards different balances on your card may depend on the terms and policies set by your credit card issuer. Generally, the payment is allocated in the following order:

  1. Minimum Payment: Firstly, any necessary minimum payment amount required by the issuer will be allocated. This minimum payment may be applied to the specific balance with the highest interest rate or spread across all balances.
  2. Promotional Balances: If you have any promotional or special balance with lower interest rates (e.g., balance transfer or purchase offers), your payment may be allocated towards reducing those balances first.
  3. Higher-Rate Balances: Once the minimum payment and promotional balances are addressed, any remaining payment is typically applied to the balance with the highest interest rate. This could be the default rate or any other balance charged at a higher rate.
  4. Fees and Finance Charges: If your account has any fees or finance charges (such as late payment fees or interest), the payment is sometimes allocated towards covering these charges before being applied to principal balances.


It's important to review your credit card issuer's terms and conditions or contact their customer service to fully understand how payments are allocated towards your specific account. This will help ensure you make informed decisions about your payments and how they affect different balances on your credit card.