No matter what type of credit card you own, whether it is a 0% interest credit card or a balance transfer card, one thing you will be able to benefit from is the positive payment hierarchy. This is something that was introduced relatively recently and now all credit card providers have to offer it to their customers.
The premise of the positive payment hierarchy is fairly simple. It means that when you make the minimum monthly payment on your outstanding credit card balance, those items that are charged at a higher rate of interest are paid off before those items at a lower rate of interest. For instance if you had a balance transfer card and had transferred over ₤600 that was charged at 0% interest, as well as ₤200 additionally outstanding that was charged at 16.8% interest, the ₤200 would be prioritised over the ₤600 and paid off first.
This is because while the ₤200 would accrue interest over time, the ₤600 would not, and so it’s cheaper for you to pay off the ₤200 first. The positive payment hierarchy essentially means that you pay less interest overall on your purchases, which can help you pay off the outstanding balance faster than you would otherwise be able to.
This is something that is especially useful for people who make use of the ability to make minimum monthly payments, as this is often how the interest builds up over time. Introducing the positive payment hierarchy helps to make your credit card balance more affordable and helps with responsible spending and money management.
As well as the positive payment hierarchy, another relatively recent addition to the list of credit card benefits is contactless payments. This technology is available on an increasing number of credit cards in an increasing number of retailers. Both developments help to make credit cards more useful and beneficial for the consumers who make use of them.
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