Understanding how your payment allocation works when making credit card payments will help you figure out how to make adjustments to your payments, if necessary, to reduce your overall balance.
Fremont, CA: When paying a credit card bill, there are several options for how your funds will be applied. If your credit card has more than one APR (Annual Percentage Rate), your payments may be applied to the highest or lowest APR balance depending on the amount paid and other factors.
Understanding how your payment allocation works when making credit card payments will help you figure out how to make adjustments to your payments, if necessary, to reduce your overall balance.
There are five types of APR that you may be applied on your credit card:
Introductory APR: After you apply for and are authorized for a credit card, an introductory APR is a zero or low-interest rate that lasts for a set period of time. Reading your monthly bill will tell you how long your introductory APR term is.
Purchase APR: When you make a purchase on your card and do not pay the entire balance within your grace period, usually on or before your payment due date, you will be charged this form of APR.
Cash Advance APR: When you take cash out of your line of credit, you'll be charged a cash advance APR, which is typically applied right away. The APR on this type of amount is frequently higher than the APR on your transaction.
Balance Transfer APR: When you transfer a partial or complete balance from another card, a balance transfer APR will be applied.
Penalty APR: This kind of APR is less frequent among credit card issuers, although it is usually charged after a series of late or missed payments or for payments made more than 60 days past the due date. This higher APR may be applied to both current and future balances in some situations. Due to the possibility of damage to your credit score as well as a higher interest rate, making on-time payments is strongly advised to prevent this penalty.
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