Defined Terms and Documents    

Order of Payments Allocation Practice means the below extract from Balance Transfer Interest Free Period Offers:

"Hidden discretely in Balance Transfer Offers was an Order of Payments in the fine print of the terms and conditions that specified which balance(s) the Credit Card Issuer of a Balance Transfer Credit Card would apply payments by the Credit Cardholder to firstly.  In nearly all cases payments by the 'Acceptor' of a Balance Transfer Credit Card were applied to the lowest interest rate balances first, namely the monies in the Zero Balance Transfer for 24 months and the highest interest rate, namely the recent payment for recent Purchases, last.  Any payments by the Credit Cardholder were applied firstly to the Balance Transfer amount under a 'Teaser Interest Rate', whereupon any Purchases or Cash Advances were deemed unpaid and incurred interest at the specified interest rates from the date of each Purchase or Cash Advance.  Hence, if you had a Balance Transfer amount, and you used the Balance Transfer Credit Card, you did not enjoy an Interest Free Period (referred to as a Grace Period in the USA) and you supposed 24 months Zero Interest Rate on your Balance Transfer Amount was eroded. 

Below is an extract from the Woolworths Everyday Money MasterCard Credit Card pre 1 July 2012:

(2) The interest rate of 5.99% will apply for the first 6 months of your balance transfers from non HSBC/Woolworths credit or store cards. After this period, any balance outstanding from the balance your transfer will accrue interest at the Cash Advance Interest Rate applicable at the time (currently 21.34%p.a).  HSBC may allocate payments we receive from you to pay the total amount owing in any order we see fit, including applying any or all payments made to your Woolworths credit card account, to reduce the balance(s) transferred first and then any subsequent purchases.

The Guardian article "Interest-free credit card trap snaring unwitting borrowers" - 25 March 2012 notes, 'inter alia' that:.

"Brian Cole, of Capital One in the UK, the bank that first introduced zero-interest balance transfers to Britain in the 90s, says: "There's a lot of practice in the [banking] marketplace that is shameful, and credit card companies are not immune. [Balance transfer] customers think they're going to progress in getting out of debt, and get some relief from interest payments. But make a mistake and you will end up making money for your credit card company."

Alas some Credit Card Issuers devised new methods to exploit Australian Credit Cardholders s with poor Financial Literacy as exampled in Labyrinth of ‘Concealed Spiders’:

(A)       Example 3 highlights that some Credit Card Issuers of Balance Transfer Credit Cards have since introduced, but not overtly publicised to prospective new customers, that an Interest Free Period will not apply on Purchases until after the Balance Transfer amount is repaid in full and the Credit Cardholder has repaid its Total Amount Owing, including its Balance Transfer amount.

(B)       Example 4 highlights that on some of the Balance Transfer Interest-Free Period Offers, should the Credit Cardholder make a Purchase/s and not repay their Balance Transfer amount and any Purchase/s by the Payment Due Date, s/he will not only be charged interest on the aggregate of their Purchases and the Balance Transfer amount, but also forego their Interest Free Period for the subsequent two months.

(C)       Some Credit Card Issuers of Balance Transfer Credit Cards provide a Calculator for prospective new customers to determine how much interest they could save during the 'Teaser Interest Rate' (sometimes 0%) for an 'Introductory Period' (from 3 months to 24 months).  Hidden in the fine print is  An assumptions that this calculator makes is that  "You don’t make any purchases on your card until the promotional period ends or the balance transfer is paid in full."  See Calculate how much interest you could save!"

See:

Order Of Payments

Balance Transfer Interest-Free Period Offers

The interest-free credit card trap snaring unwitting borrowers - The Guardian - 25 March 2012

What You Must Know Before Transferring Credit Card Balances

Zero-interest balance transfers credit cards can have sting

'Zero balance' credit card deals under ASIC microscope

How to effectively use a "Balance Transfer":

finder.com.au provides "Find out about the Credit Card Reforms happening 1st July 2012".

Balance Transfer Credit Cards - finder.com.au  - 11 Sept 2017

Balance Transfer Guide

Latest in Balance Transfers  -  Canstar

"Discounted balance transfer offers