The New Credit Card Act of 2009 takes effect on February 22, 2010 To help you prepare, my blog will feature Nine Tips over the next three weeks.
Tip Number Seven
Do you ever wonder why it takes so long to pay off your credit card balance? It’s partly because creditors apply your credit card payment to the lowest interest rate balance first.
Here’s an example: Let’s say you took a zero percent balance transfer offer. Then, you made some new purchases on that card. In the past, your payment would go to the balance transfer amount first until that’s paid off, while you’re interest rates pile up on those clothes you bought 6 months ago. That allowed the credit card company to make the most interest it possibly could possible off your purchase.
Well, no more. The Credit Card Act of 2009 will require creditors to apply your payment to the highest interest rate balance first.