Why Are Only Some 0% Balance Credit Cards Suitable For Making New Purchases?

The order of payments. The allocation of payments. The payments hierarchy. The adverse order of payments. These all refer to the same rule, and it is the reason why you must be very careful when you are thinking of making purchases on a 0% balance transfer credit card that you have already used for the purpose of a balance transfer.

The 0% credit card you must locate if you are going to make any purchases on it will have a 0% offer on both balance transfers and purchases for the same length of time. If not, you will fall foul of the above rule.

The above rule states that your credit card balance will be paid down according to the rates of interest that are applied to the various debts that make it up. If you have $2,000 on a balance transfer at 0%, $1,000 on purchases at 15%, and $500 on cash transactions at 20%, the repayments you make will be allocated in a certain way. Namely, to your balance transfer until that is fully paid off; then to your purchases until they are fully paid off; and then to your cash transactions. The rule is: cheapest first. The upshot is: more interest accruing for the credit card company for the longest time on your most expensive debts.

Unless you can find a combined 0% balance transfer and purchases deal, where both run concurrently, then you should not make purchases or cash transactions on a balance transfer credit card that has a transferred balance on it. Deals where the 0% on purchases lasts for a shorter period than the 0% on balance transfers will also have the same effect, as the higher rate will kick in on your purchases before the balance transfer deal ends.

There are combined deals out there at the moment, but you need to search around and make comparisons. If you cannot find such a deal that suits your requirements, then you should take just a balance transfer deal and keep your card exclusively for your balance transfer, and either make purchases on an old credit card, or apply for a second credit card for the purpose of making any new purchases.

A 0% balance transfer deal can be quite scuppered if the above advice is not heeded. The savings you make from not paying interest on your balance transfer can be negated by the regular rate of interest on purchases that sits “locked” away accruing interest for months on end.

Related posts:

1. Why Are There Only A Few 0% Balance Transfer And 0% Purchases Credit Card Deals?
2. St. George Vertigo MasterCard – 2.99% Balance Transfer Offer & 2.99% On Purchases
3. St.George Vertigo MasterCard Special Offer – 2.99% On Balance Transfers & Purchases
4. Best Balance Transfer Credit Card Deals
5. Why Should I Avoid Cash Transactions On A 0% Balance Transfer Credit Card?
6. Making Money With Credit Cards
7. Making Money with Credit Cards

Editor's Choice: Our Top Credit Cards

Credit Card	Card Details	Interest Rate (p.a.)	Cash Advance Rate (p.a.)	Balance Transfer Rate (p.a.)	Annual fee	Interest free days (up to)
St George Vertigo	Editor's Choice: Low Interest Low 2.99% for 6 months (reverts to 11.99%) p.a. interest rate and balance transfer rate, from one of Australia's most respected banks.	2.99% for 6 months (reverts to 11.99%)	20.74%	2.99% for 6 months	$55	55
Coles Group Source MasterCard	The Coles Group Source MasterCard has no annual fee, a 0% p.a. balance transfer offer for 6 months, with a rewards program including savings on fuel and FlyBuys Points	19.74%	21.99%	0% for 6 months	$0	62
Bankwest Zero Platinum MasterCard	Editor's Choice: No Annual Fee Excellent introductory offer with a $0 annual fee for the life of the credit card and a 1.99% p.a. for 9 months on balance transfers	16.99%	16.99%	1.99% for 9 months	$0	55