When Jeff sends in $200 towards his credit card balances, which balance does it need to apply to?

When a consumer makes a payment towards their credit card balances, the payment typically needs to be applied to the balances that will incur the highest interest rates first. In most cases, cash advances carry a higher interest rate compared to regular purchases or balance transfers. Therefore, when Jeff sends in $200 towards his credit card balances, it should be applied to his cash advance balance first. This practice helps minimize the amount of interest that accrues over time, as cash advances typically start accruing interest immediately and have less favorable repayment terms.

While it's important for customers to know their individual credit card agreements, the general rule of thumb is to pay down the balance with the highest interest rate first, which in this scenario is the cash advance balance. This ensures that the payment is used most effectively to reduce financial charges. In other cases, purchases or balance transfers may have lower interest rates or different terms, leading to a longer repayment timeline if not prioritized correctly.