What is Payment Allocation?

How a credit card issuer must apply a cardholder's money reimbursement to multiple balances owed on their credit card account, as dictated by the Credit Card Act of 2009. There could be multiple balances on an account if a cardholder makes different types of transactions, such as purchases, balance transfers, cash advances, and more. Under this act, if a cardholder pays more than the minimum amount due, any excess funds must be applied to higher-interest balances.