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rated:
Sorry if this is the wrong place to ask.  

Currently, I'm carrying a balance from a 0% APR balance transfer on my chase freedom card and plan to pay only the minimum due until the zero APR expires. Since the freedom card has some nice 5% categories in Q2, I was wondering if it's possible to take advantage of the bonus earning while avoiding incurring interest from new purchases. I checked the T&Cs and realize that I won't have a grace period on purchases if I don't pay off the entire balance first (meaning any new purchase will immediately generate interest once it's posted unless I pay the statement balance in full beforehand). AFAIK, the CARD Act requires that card issuers apply payment amounts in excess of the minimum payment to the highest interest rate balance. 

So my question is: if I make a payment that equals ($minimumDue + $newPurchases) BEFORE the new purchases, will the $newPurchases be applied to the new purchases, or the $newPurchase will still be applied to the remaining transferred balance rather than the new purchases, since the new purchases have not happened at that point of time? If it's the later, can I avoid the interest by making sure purchases and payment of purchases happening on the same day, or payments happening on the day when purchases are posted to the account (which one?)? Thank you. 

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rated:
If you "pre-pay" for the new purchases, it is likely that they get applied to the BT balance.
If you pay after the purchase *posts*, it *may* get applied to the new purchase.

Try it on a small "test" case before doing it on a large scale.

rated:
fwuser12 said:   If you "pre-pay" for the new purchases, it is likely that they get applied to the BT balance.
If you pay after the purchase *posts*, it *may* get applied to the new purchase.

Try it on a small "test" case before doing it on a large scale.

Thank you for your quick response. I think there will be interest if I pay after the purchase posts, since I don't have a grace period and there's a time gap between purchase and payment. Also, I'm not sure if chase starts charging interest when a purchase is made or when the purchase is posted, but my guess it's the later, since otherwise it doesn't make sense if, for example, some meaningless pre-authorization charge by hotels that disappears later could also accumulate interest. But from what i was told, cash advance will immediately charge interest rather than when it's posted a few days later. I think you are right that i need to do a small test to see how it goes.

rated:
Being in the same boat you are, I can state with certainty any payments made before the proposed new item charge posts WILL BE applied to the 0% APR.
The question is after the new item posts can you pay it off. That varies by CC issuer and/or card in some cases. Last Christmas, while still under 0% APR, I backed up the truck with Christmas deals that I could not refuse. I made money on that action. I do not recall if paying before the new bill cut.
Your best bet would be to call Chase asking them if payment can be applied to new purchases before next billing.

rated:
I don't think you need to sweat it.

If you're picking up an extra 3% over some other card, you're ahead $3.00 on a $100 purchase. If you pay interest on that $100 for say 2 weeks at 15% that's about sixty cents.

rated:
The rules on how payments get applied to the various balances are complicated, even with the CARD Act rules which are more consumer-friendly. You definitely can make this work, but you run the risk of messing it up and paying interest on the purchase or BT balance.

If you're married, why not have your SO apply for a Chase Freedom card? Avoids this whole issue and effectively doubles your quarterly bonus limit.

rated:
I do thiswith my Ink card. What you want to do is make the purchases a few days-1week before the statement cuts. Then, you must pay the minimum payment+new purchases+expectedinterest on those purchases.

rated:
JW10 said:   Being in the same boat you are, I can state with certainty any payments made before the proposed new item charge posts WILL BE applied to the 0% APR.
The question is after the new item posts can you pay it off. That varies by CC issuer and/or card in some cases. Last Christmas, while still under 0% APR, I backed up the truck with Christmas deals that I could not refuse. I made money on that action. I do not recall if paying before the new bill cut.
Your best bet would be to call Chase asking them if payment can be applied to new purchases before next billing.

Thank you for sharing the useful info. I don't know if chase starts charging intest at the time when new item is purchased, or at the time when new item charge posts (they are usually 1 day apart). If it's the former and i make the payment when the new purchase charge posts later, then it will incur one or two days interst; If it's the later and i pay within the same day when the purchase is made, then I run the risk of applying the payment to the 0% APR only.

Under the law, all banks have to apply excess payment over minimum payment to the highest APR portion, and like you said (if i understand correctly), the point is at what time (before or on the new bill cut) the payment will be applied to the purchases. I called chase, but all the agents i talked to did not have any clue. They insisted and repeated that I would need to pay interest unless i first pay off the entire balance.

rated:
doveroftke said:   The rules on how payments get applied to the various balances are complicated, even with the CARD Act rules which are more consumer-friendly. You definitely can make this work, but you run the risk of messing it up and paying interest on the purchase or BT balance.

If you're married, why not have your SO apply for a Chase Freedom card? Avoids this whole issue and effectively doubles your quarterly bonus limit.

It is complicated! Citi does not charge any interest for new purchases if i pay minimum due and the new purchases by the new bill cut. 

Who says i have only 1 freedom card? I usually downgraded chase premium cards to the freedom card to get more slots under chase's 5/24 rule.

rated:
Bend3r said:   I do thiswith my Ink card. What you want to do is make the purchases a few days-1week before the statement cuts. Then, you must pay the minimum payment+new purchases+expectedinterest on those purchases.
Thank you for sharing. Based on my own calculation, my daily interest would be ~$5 and the expected bonus earning I have is less than $60, so I try to minimize the interest to make the whole thing worth. I would probably make the new purchases 1 day before the statement cut and pay them off on the statement cut day.

rated:
The only issue with waiting until the very last day (as opposed to 3-5 days early) is that then if the merchant or chase delays posting it (not just authorizing it), it would then end up in your new period and incur almost a months worth of interest.  Usually you aren't allowed to set the statement close date except by proxy of the due date, so it can be challenging staying on top of the exact date each month.

Even a week of interest is not too bad if you are earning 5 or 8%. 1 week of 25% interest is <0.5%. A month of interest is almost 2% though.

You may still end up with a few cents ongoing interest charges (im not sure), because the few days' interest charges you paid off may already accrue some interest for the next month. I am unsure because every single month I do the new purchases ( cable/internet bill.)  I normally pay about $0.60 interest charge and receive ~700 UR points, worth ~$10.40 in southwest airlines flights.

In response to your other question: since you are carrying a balance (the transfer), interest accrues on the first day for new purchases. However Chase doesn't compute the interest charge until the statement cuts, and they don't let you pay off the "new purchases" balance until the statement cuts. You have the right idea. Minimize the interest charge and it canstill be worth it for 5-8% rebate purchases.

rated:
I have a Disney Visa (Chase) and charge vacations which have a 6 months zero interest. I imagine this works the same way. I pay my card in full, less the promotional balance, PLUS any credits. What happens is that any credits (from any returns) reduce the promotional balance. The statement indicates how much is the promotional balance and when that is due. To avoid any finance charges, you need to pay the full balance less the promotional balances.

Month 1
Day 1 - Purchase $1000 (earns 2%)
Day 2 - Charge Disney Vacation $2000 (6 months deferred - earns 2%)
Balance due $3000
Promotional balance $2000
Payment made $1000

Month 2
Day 1 - Purchase $1000 (earns 2%)
Day 2 - Return $500 (loose 2%)
Balance due $2500
Promotional balance $1500
Payment made $1000

Hope it makes sense.

rated:
rsuaver said:   Month 1
Day 1 - Purchase $1000 (earns 2%)
Day 2 - Charge Disney Vacation $2000 (6 months deferred - earns 2%)
Balance due $3000
Promotional balance $2000
Payment made $1000

Month 2
Day 1 - Purchase $1000 (earns 2%)
Day 2 - Return $500 (loose 2%)
Balance due $2500
Promotional balance $1500
Payment made $1000

Hope it makes sense.

  That's not howmost credit cards work.  Since its Chase it's doubtful that's howit works on yours (but maybe it does because of the specific promotions.  Maybe "deferred" is handled differently than a promotional balance transfer rate).

Normally carrying any balance, including promotional balances, means there's no grace period on new purchases.  If your example was a Chase freedom, you would be paying no interest on the purchase in month 1 (no balance the prior month) but in month 2 you would accrue ~29 days of interest on either $500 or most likely $1000 on the statement with the second months' charges.

rated:
Bend3r said:   The only issue with waiting until the very last day (as opposed to 3-5 days early) is that then if the merchant or chase delays posting it (not just authorizing it), it would then end up in your new period and incur almost a months worth of interest.  Usually you aren't allowed to set the statement close date except by proxy of the due date, so it can be challenging staying on top of the exact date each month.

Even a week of interest is not too bad if you are earning 5 or 8%. 1 week of 25% interest is <0.5%. A month of interest is almost 2% though.

You may still end up with a few cents ongoing interest charges (im not sure), because the few days' interest charges you paid off may already accrue some interest for the next month. I am unsure because every single month I do the new purchases ( cable/internet bill.)  I normally pay about $0.60 interest charge and receive ~700 UR points, worth ~$10.40 in southwest airlines flights.

In response to your other question: since you are carrying a balance (the transfer), interest accrues on the first day for new purchases. However Chase doesn't compute the interest charge until the statement cuts, and they don't let you pay off the "new purchases" balance until the statement cuts. You have the right idea. Minimize the interest charge and it canstill be worth it for 5-8% rebate purchases.


I noticed that chase will normally finalize transactions a bit faster to include them in the statement so i thought 1 business day prior to the statement cuts could be enough. But to avoid the risk of 10% interest the next month, I agree that it's good to make the purchases earlier. Do you know if interest starts to accrue on the first day when purchases are made, or on the day when they post?

rated:
rsuaver said:   I have a Disney Visa (Chase) and charge vacations which have a 6 months zero interest. I imagine this works the same way. I pay my card in full, less the promotional balance, PLUS any credits. What happens is that any credits (from any returns) reduce the promotional balance. The statement indicates how much is the promotional balance and when that is due. To avoid any finance charges, you need to pay the full balance less the promotional balances.

Month 1
Day 1 - Purchase $1000 (earns 2%)
Day 2 - Charge Disney Vacation $2000 (6 months deferred - earns 2%)
Balance due $3000
Promotional balance $2000
Payment made $1000

Month 2
Day 1 - Purchase $1000 (earns 2%)
Day 2 - Return $500 (loose 2%)
Balance due $2500
Promotional balance $1500
Payment made $1000

Hope it makes sense.


Thanks for the data point. I guess the idea is that banks will try to maximize the interest as much as the terms allow.

rated:
Do not mix purchases and 0% BT offers with Chase.  I battled them in writing about their payment application "practices" versus the T&C.  They do not apply payments as they state in T&C and you will wind up fighting the entire way. 

rated:
DoItYourself said:   Do not mix purchases and 0% BT offers with Chase.  I battled them in writing about their payment application "practices" versus the T&C.  They do not apply payments as they state in T&C and you will wind up fighting the entire way. 
Thanks! The law requires card issuers to apply the portion of payments over minimum due to the highest APR first, and big banks like Chase usually comply. Do you mind disclosing more details on the charges? That may help to understand how Chase's payment application works (and how they get around the rules).

rated:
damian007 said:   
DoItYourself said:   Do not mix purchases and 0% BT offers with Chase.  I battled them in writing about their payment application "practices" versus the T&C.  They do not apply payments as they state in T&C and you will wind up fighting the entire way. 
Thanks! The law requires card issuers to apply the portion of payments over minimum due to the highest APR first, and big banks like Chase usually comply. Do you mind disclosing more details on the charges? That may help to understand how Chase's payment application works (and how they get around the rules).

Same month (0 starting balance)  Small purchases balance form buying items in the 5% list in the same month as taking a 0% BT offer.  Paying the full balance of purchases plus the Minimum Balance due did not pay the purchases first.  I battled this in writing and after 3 months of writing that they applied my payments incorrectly they finally fixed it.  The law is clear, their interpretation and implementation is illegal and they wait for consumers to fight their fight against them.

rated:
DoItYourself said:   
damian007 said:   
DoItYourself said:   Do not mix purchases and 0% BT offers with Chase.  I battled them in writing about their payment application "practices" versus the T&C.  They do not apply payments as they state in T&C and you will wind up fighting the entire way. 
Thanks! The law requires card issuers to apply the portion of payments over minimum due to the highest APR first, and big banks like Chase usually comply. Do you mind disclosing more details on the charges? That may help to understand how Chase's payment application works (and how they get around the rules).

Same month (0 starting balance)  Small purchases balance form buying items in the 5% list in the same month as taking a 0% BT offer.  Paying the full balance of purchases plus the Minimum Balance due did not pay the purchases first.  I battled this in writing and after 3 months of writing that they applied my payments incorrectly they finally fixed it.  The law is clear, their interpretation and implementation is illegal and they wait for consumers to fight their fight against them.

Thanks for the info! I'm curious about how their system works,so some detailed numbers would help a lot. How many days in advance of the statement cut off day did you make the new purchases and what was/were the new purchase amount? Also, how much did you pay in addition to the minimum balance, and what was the purchase APR and interest Chase charged you? 

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