As was seen on Boston Legal recently - in time for "holidays" shopping

[question everything]

Originally published Monday, December 19, 2005

Extra credit-card assignment: Always read the fine print
By Steve Bucci
BANKRATE.COM

Question:I have a credit card with a large outstanding balance. Part of the balance is at a high interest rate, and the rest is at a promotional rate. The credit card company is applying the entire payment against the promotional balance, which means my high-rate balance isn't going down. Is this legal?

-- MORLEY

Answer: I'm sorry to tell you that the answer to your question is almost certainly yes, it is legal. What you describe is the normal, everyday practice of the credit card industry: Payments are usually applied first to the balance with the lowest interest rate. What's more, you agreed to it.

(snip)

The terms for the promotional and other rates contained in your credit card agreement may not be attractively displayed with eye-catching graphics, but they are there in all that dull and sometimes tiny print. These terms will state exactly how payments will be applied and to which rate, if applicable. The terms also will spell out how long promotional rates will last and any restrictions.

Make your payments on time, every time. One late payment can and probably will cancel any promotional rates and may even raise your regular rate to the penalty rate. The large credit card companies, such as Bank of America and Citibank, charge a 31 percent penalty rate, and on top of that, you will be charged a late fee. The large credit card companies today charge a late fee of $35 to $39.

(snip)

Be aware of what moving balances from one card to a new card can do to your credit if you don't do it right. Taking advantage of a new low rate by opening a new card account will lower your credit score. Also, if the balance moved is more than 50 percent of the card's limit, you will be dinged by the credit scorers a second time. And lastly, if you close your old account and it is an account with a long track record, you'll take a third hit, because old credit is the best credit to the credit-scoring models. You can use Bankrate's FICO Score Estimator for a free look at how these changes would affect your score.

(snip)

Find this article at:
http://www.dailybreeze.com/business/articles/2089297.html

[texpatriot2004]

1. Boston Legal did a great job with this issue in that episode nm

[movonne]

2. I love this program....

[SW FL Dem]

3. Not only that - they also charge you the higher rate on new purchases

because you are carrying a balance at the promotional rate. We did some major kitchen renovations earlier this year and charged some big ticket items on a credit card. The company offered to let us pay off the balance at 1 percent interest. It sounded like a great deal until I asked about how new purchases would be treated. I was told that since I had a balance, the new charges would bear interest from the date incurred even if I paid them in full by the due date. Buyer Beware!!

[question everything]

4. Indeed. We also play the game of rolling balances and using

promotional rates. But once we charge, that credit card is put away and not being used until that charge is being paid.

If we are using an existing card, I wait for the balance to clear, make sure that the check has been cleared and even wait beyond the closing date - some will still charge a buck for the last finance charge - before I would use the promotional rate.