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0 pointsshabble14y ago0 comments

I've heard it mentioned as 'largest payment first', with the stated argument that it's most likely to be a loan or some other important payment, but has the practical effect of triggering charges on way more items.

It's For Your Benefit, citizen.

(Also, the cash advance interest differential for credit-cards, which is higher, and only paid off after all other charges are covered, rather than any sort of temporal ordering)

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6 comments · 3 top-level

cperciva14y ago· 3 in thread

Also, the cash advance interest differential for credit-cards, which is higher, and only paid off after all other charges are covered, rather than any sort of temporal ordering

FWIW, in Canada credit card issuers are required to apply payments to whichever balances you're paying the highest interest rate on -- it's not even temporally ordered.

eftpotrm14y ago

Are you complaining that they're required to service the more expensive (to you) debts first? Why?

UK banks used to have a god racket (don't know if they still do, don't read the relevant blogs) where they'd offer 0% balance transfer cards but with expensive purchase interest. Then, any payments you made went to paying off the oldest debt first (on which you were paying 0% interest) leaving the purchases quickly gaining high interest payments.

cperciva14y ago

No, not complaining. (It doesn't affect me anyway; I never pay any interest.) Just observing that in Canada the rules work to the advantage of consumers and the sky hasn't fallen yet.

ralph14y ago

I think the UK is now like Canada; payments to the card issuer must now be offset against the dearest loan first.

rue14y ago

> It's For Your Benefit, citizen.

I take exception to using “citizen”, here, since it implies the gov't is somehow at fault…

In reality, the banks had indeed devised such a scheme, and for the obvious reasons, but it's since been disallowed by government intervention, along with a few other things sucha as actually being able to opt out of overdraft “protection” (this was just a few years ago but fortunately I don't have to care about what US banks do anymore).

gujk14y ago

The government acts For Your Benefit, citizen. Business acts For An Exciting Opportunity, Especially For You!

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