99% Of Credit Cards Use This Dire Trick by Finance News Bulletin

Published: 17/10/07

If you already be acquainted with what 'payment hierarchy' is, skip to the table below to see the four credit cards that have fair conditions For those who don't know what I'm talking about, I'll explain nowWhen you have more than one kind of debt on your credit card (eg

a balance transfer, a purchase and a cash removal, what order are they paid off in In other words, what is the 'sum hierarchy'A 'positive sum hierarchy' is when you repay the most luxurious debt first, ie

the one with the highest interest rateWith a positive sum hierarchy, you pay off the cash withdrawal first, so your most expensive money owing is being empty earlier Then you pay the next most expensive, the purchase And lastly you clear the 0% balance transfer

This way, you disburse the least interest possibleWith a negative disbursement hierarchy, however, the reverse is true You disburse off the 0% debt first, whilst your purchase and cash withdrawals stay on the credit card racking up loads in extra interestnowadays I trawled through the small print of 300 credit cards

Of these cards, just four (1%) had a optimistic payment hierarchy, and one a semi-positive perhaps) That means 296 (99%) had the nasty unenthusiastic payment hierarchy This explains why so many credit cards present 0% balance-transfer deals, because the card providers hope you'll employ the card for purchases and withdrawals too

is 179% APRrarity donation of £6 to Comic Relief when you first use the certificate, then 05% of all purchases

Nationwide is probably the industry head when it comes to fair terms in contracts All three of its credit cards continue to have a optimistic payment hierarchy The only other card I could find was Saga's, although it doesn't present a 0% deal, just 59% on equilibrium transfers for six months, for which you are still charged a fee (2%)

There is another card that appears to be semi-positive: ASDA's Credit Card It looks as though it's positive if you put on't do any cash advances (which include such things as moving back cash or gambling) However, the details weren't clear in the little print, so be wary (as always)As a little sideways, The Fool always vigorously suggests that you put on't use your credit certificate for cash advances, because there is no interest-free period and the interest rate is always very high

The data I sifted through for this article was from Moneyfacts It was dated July, but there has been no change in the market since then that would prompt providers to get better their terms Even so, before captivating any card, make sure you check the sum order A positive order should read something like this in the small print:'expenditure in excess of the minimum are practical to the highest interest rate bearing balances first, ahead of those that attract a lower interest speed

' (Taken from countrywide's terms and conditions)The 300 cards I searched are the vast majority, but if you know of any others with a positive hierarchy, please let me know inquire Fools on our Credit Cards & Loans discussion board if you're unsure about any terms and conditionsSoon I'll mark about three strategies that allow you to avoid negative payment hierarchy, which will leave you even better off than using the above credit cards

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