(a) General rule. Except as provided in paragraph (b) of this section,
when a consumer makes a payment in excess of the required minimum
periodic payment for a credit card account under an open-end (not
home-secured) consumer credit plan, the card issuer must allocate
the excess amount first to the balance with the highest annual percentage
rate and any remaining portion to the other balances in descending
order based on the applicable annual percentage rate.
(b) Special rules.
(1) Accounts with balances subject to deferred interest or similar program. When a balance on a credit card account under an open-end (not home-secured)
consumer credit plan is subject to a deferred interest or similar
program that provides that a consumer will not be obligated to pay
interest that accrues on the balance if the balance is paid
in full prior to the expiration of a specified period of time:
(i) Last two billing cycles. The card
issuer must allocate any amount paid by the consumer in excess of
the required minimum periodic payment consistent with paragraph (a)
of this section, except that, during the two billing cycles immediately
preceding expiration of the specified period, the excess amount must
be allocated first to the balance subject to the deferred interest
or similar program and any remaining portion allocated to any other
balances consistent with paragraph (a) of this section; or
(ii) Consumer request. The card issuer may at
its option allocate any amount paid by the consumer in excess of the
required minimum periodic payment among the balances on the account
in the manner requested by the consumer.
(2) Accounts with secured balances. When a balance on a credit card
account under an open-end (not home-secured) consumer credit plan
is secured, the card issuer may at its option allocate any amount
paid by the consumer in excess of the required minimum periodic payment
to that balance if requested by the consumer.
