How Are Credit Card Payments Prioritised?

When you make payments towards your credit card debt, do you know how those payments are prioritised in terms of interest, debt and actual charges?

By using your credit card, you arent only accumulating debt. Youre also incurring transactional fees and interest charges (if you havent settled your balance within the interest-free period, where applicable). Do you know how the bank prioritises your credit card payments? Its important to know how your bank divides up your monthly credit card instalments, because depending on how this is done, you could have your monthly payments reduced.

Weve done some research on the prioritisation of credit card payments, and how you can optimise this process to reduce your monthly payments.

How does the bank divide up my credit card instalments?
Most banks prioritise payments according to a method of priority, but this method may however differ from bank to bank. Essentially, your instalments are divided up as follows:

1.Interest charges
2.Transactional fees
3.Balance transfer
4.Budget transactions
5.Normal purchases

Each month, payment is allocated to each of these buckets according to the amount owed in each one. Because each bank operates differently, its a good idea to go into your branch and find out how they divide up your payments each month. Doing this will help you to see where you could be saving money, and thus help you to reduce your monthly credit card payments.

Apply for a credit card online, right now
Applying for a credit card is easier than ever. Simply compare the credit cards available online in order to find the one that best suits your spending requirements. Then apply online to find out whether you qualify its quick and completely confidential.

About the Author:
Plastiq is an online credit card site offering a range of leading South African credit cards. Use the site to compare credit cards, such as Nedbank personal credit cards and prestigious American Express credit cards.

Article Originally Published On: http://www.articlesnatch.com

Tags: prioritising

, credit card

, payments

, interest

, charges

, debt

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