Creditors applying payments to high interest credit card balances first?

Yes it is true! The new credit card rules will force credit card issuers to use your monthly payments, above the minimum, to pay down the highest rate portions of your balance due first. In the past if you had a 0% interest rate balance of $10,000 and another balance of charges that had an interest rate of 20%, on the same credit card, the lower interest rate balance would be paid first. With that method the credit card companies would make the most money on your balance owed.

This new method is a start in the right direction for consumers to have some protection from what seems to be predatory lending by credit card companies. This should take a large burden off many who have multiple types of balances on credit card accounts. Some individuals did not realize until the damage was done that the lower interest rate portion would be paid first. Others didn’t have a choice with loss of income and high debt. If they had that $10,000 0% balance and a $2000 20% balance it could take a very long time, with diminished funds coming in, to reduce that high rate sum. This makes the transaction very costly, the exact opposite of their original purpose, at the end of the day. It is amazing the credit card grantors were allowed to get away with this loan shark behavior for so long!

“Great credit brings great opportunity”