(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.
