I know I read about this here a year or so ago, but I can't find it. Assume you have a credit card with different APR's. For example $5,000 balance at a 3.9% promotional APR for BT's; $5,000 balance at 9.9% for regular purchases; and $2,000 balance for cash advances at 19.9% APR; for a total balnce of $12,000. When you pay it down, it is my understanding that they normally will use the principal part of the payment to pay down the lower APR balance, which gives them more interest in the long run. I think that there is at least one company that applys the principal payment proportionally to all three balances. But, I read here that there is a way to have them apply the principal payment to the highest APR balance. I know it involved mailing the payment to a different address and that you had to give specific instructions. Am I right on this, or have I gone mad? Is this just one company, or is it common? I am asking because Citi is offering me a great BT rate, but I don't have enough of a balance to make it worthwhile. Doing a little at a time, back and forth between cards, may make it worthwhile.
