Credit Card Purchase Payment Plans

[ny96]

Does anyone know how programs like My Chase Plan work? For background (hope this explanation is clear), we have had a lot of expenses this spring (taxes, property taxes, summer camp, vacation) and we are potentially carrying a bit of a balance on our Chase card. At the same time we are remodeling and have an account that we are pulling from to cover those expenses. A lot of these expenses we are putting on our credit card and I have taken advantage of the My Chase Plan for these because I figure that the costs associated with the payment plan are less than any interest charges we would accrue and any of those charges can be immediately paid back. The issue is that I get approved for the purchase plan for a specific purchase, for example a 4k appliance deposit, and I choose a 6 month payment plan. I have an 18k balance on my card and I make an 11k payment. Soon after I receive an email from Chase saying that I paid off the plan, why is this when the payment plan has only been in place for a couple weeks and my remaining balance is higher than the purchase amount?

[pierogigirl]

I have no experience with this, but I would check the paperwork to see how payments are applied. It might say something like any "overpayment" on the minimum will be applied to the payment plan first. There might be a way to designate where the payment goes. For example, with my mortgage, if I pay extra and don't tell them it's a principal payment, it just gets applied to the loan total (with interest for the life of the loan) and not to the principal.

I would guess there is a benefit to the credit card company as (if I understand it correctly) you are having an interest generating balance on your account as a result.

[trissie18]

Not sure if it is the same but we have a 0% balance on our Lowe's card for an oven purchase with a 12 month expiration date but we still charge regular purchases. I had to choose how I wanted payments applied to ensure that all regular purchases on the statement are paid before the 0% balance to avoid any interest on the regular purchases.

I was reading the fine print on a 0% balance transfer promotion on my Discover Card and it said that in order to avoid interest on any regular purchases, the entire 0% balance plus the regular purchases had to be paid in full by the next statement...which is counterproductive to doing the 0% BT if you use the card for regular purchases at the same time. So maybe your situation is what is happening here - its how the cc company makes their money.

[atlas]

Yeah, that’s how it works with Amex. Any money put towards your card in the middle of a period goes to the Plan.

So like $1000 plan over 6 months with $20 total fee. $170 due on the plan each month.

Then you charge $4000 in regular stuff one month. Minimum payment due is $40. Your actual minimum is $210 for that month.

If you pay $4170 your currently balance is back to zero, but your card balance is still sitting at $830 or whatever. If you then charge something for $1000 and then want to pay it off immediately, the $1000 will go $830 to your plan and then $170 to the $1000 charge.

Chase is probably the same.

[ny96]

Apr 21, 2022 16:17:52 GMT -5 atlas said:

Yeah, that’s how it works with Amex. Any money put towards your card in the middle of a period goes to the Plan.

So like $1000 plan over 6 months with $20 total fee. $170 due on the plan each month.

Then you charge $4000 in regular stuff one month. Minimum payment due is $40. Your actual minimum is $210 for that month.

If you pay $4170 your currently balance is back to zero, but your card balance is still sitting at $830 or whatever. If you then charge something for $1000 and then want to pay it off immediately, the $1000 will go $830 to your plan and then $170 to the $1000 charge.

Chase is probably the same.

Ugh, that’s annoying.

[sadlebred]

Have you considered looking at an unsecured personal loan to pay some of the CC balance off? I realize it's trading one debt for another. Your interest rate is likely to be MUCH lower, especially if you have great or excellent credit.

www.nerdwallet.com/best/loans/personal-loans/unsecured-loans

www.bankrate.com/loans/personal-loans/rates/

[ny96]

Apr 21, 2022 22:04:43 GMT -5 sadlebred said:

Have you considered looking at an unsecured personal loan to pay some of the CC balance off? I realize it's trading one debt for another. Your interest rate is likely to be MUCH lower, especially if you have great or excellent credit.

www.nerdwallet.com/best/loans/personal-loans/unsecured-loans

www.bankrate.com/loans/personal-loans/rates/

We have the cash in investment accounts to pay off the credit card, but for several reasons we’d rather deal with interest charges.