Personal Finance

question about credit card interest

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  • Sep 10th, 2013 10:50 pm
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Sr. Member
Mar 3, 2009
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question about credit card interest

Let's say your credit card statement comes due on July 21, but you miss paying until July 31. So you get charged interest for those 10 days.

My question is, since you paid everything in full on July 31, why do you get charged additional interest on your next statement, which is due on Aug 21? Does it have to do with additional items being purchased between July 21 and Aug 21? Is there a way to avoid that second interest hit?
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Feb 15, 2008
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fred999 wrote: Let's say your credit card statement comes due on July 21, but you miss paying until July 31. So you get charged interest for those 10 days.
Nope. You get charged interest on the purchases from the time they are made, until the payment. So if you made a bunch of purchases on the first day of the billing cycle, in theory, you could be paying 50-60 days worth of interest. For being a mere 10 days late.
My question is, since you paid everything in full on July 31, why do you get charged additional interest on your next statement, which is due on Aug 21? Does it have to do with additional items being purchased between July 21 and Aug 21? Is there a way to avoid that second interest hit?
Yes, you can avoid the second interest hit by paying everything off on-time.

The calculations are very unfavourable to the consumer. But there is the grace period, if you use the card in such a way that you are paying it off in full every statement. And there's the cash back, frequent flyer points, etc. Bottom line is don't buy stuff on your credit card unless you can pay it off in full before the due date.
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Oct 24, 2012
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If you miss the July 21st date, you get dinged for interests from the day of purchase until July 21st.
The August 21st statement will charge you interests for the balance of July 21st to July 31st (day you paid everything).

The key thing here to know is that you don't start paying interests on the balance starting on the statement due date, you actually start "owing" interests from the day you made your purchase! However the CC company is nice enough to not charge you those interests if you pay in full on the due date.
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Jan 14, 2007
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Credit cards charge interest from the date of the transaction if you don't pay the balance. It's not just those 10 days from the date it was due to the date you paid.
If you made purchase June 6, and your statement date is July 1 with July 21 due date (21 day grace period) then if you don't pay the full balance by the 21st, you will be charged interest from June 6 to July 21 on your next statement plus those 10 days of interest as well as interest on interest the interest charged from june 6 to 21.
To get out of the cycle you will need to overpay your balance owing.
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Mar 3, 2009
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IMHIP2 wrote: Credit cards charge interest from the date of the transaction if you don't pay the balance. It's not just those 10 days from the date it was due to the date you paid.
If you made purchase June 6, and your statement date is July 1 with July 21 due date (21 day grace period) then if you don't pay the full balance by the 21st, you will be charged interest from June 6 to July 21 on your next statement plus those 10 days of interest as well as interest on interest the interest charged from june 6 to 21.
To get out of the cycle you will need to overpay your balance owing.
Yeah, that's what I was trying to get to. I tried that but it didn't work. I overpaid my balance, but I think other purchases came in there somewhere, So on my next statement, I still got dinged.

So it seems that they somehow use all purchases, as long as you have more than a 0 balance? Does that make sense?
Sr. Member
Mar 3, 2009
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My mistake - I said only 10 days interest, but that was fuzzy thinking... thanks....
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Mar 3, 2009
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Mark77 wrote: Nope. You get charged interest on the purchases from the time they are made, until the payment. So if you made a bunch of purchases on the first day of the billing cycle, in theory, you could be paying 50-60 days worth of interest. For being a mere 10 days late.


.
So why do you say 50-60 days? How does that work?
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Feb 15, 2008
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fred999 wrote: So why do you say 50-60 days? How does that work?
Well my billing cycle goes from September 10. So if I make a purchase today, $10k, I will receive my CC bill on October 10, and will have until October 30 to pay.

If I pay $10k on October 30, for a purchase I make today -- that will be 50 days interest-free.

If I pay $10k on October 31, for a purchase I make today -- I will be charged 51 days worth of interest on the next bill. Plus, there will be a charge for interest on the interest.

51 days of interest @ 20%/annum, on 50 days is roughly $250.
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Jan 8, 2009
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The interest grace period has nothing to do with your due date. It's from the date of the transaction. Unless its a cash advance and then it is immediate.
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Aug 1, 2008
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dont want to highjack thread but got a similar question that I always wondered about. Let's say my statement date is today septembre 10 with a balance of $1k. Then my due date is october 1st. I still continue to makes purchase and my balance on october 1st is now $1500. If I send them a payment of $1k, am I ok or will they split the payment between due amount and "not yet due" amount?

Hope I am clear enough.
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Apr 2, 2013
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Bomberman07 wrote: dont want to highjack thread but got a similar question that I always wondered about. Let's say my statement date is today septembre 10 with a balance of $1k. Then my due date is october 1st. I still continue to makes purchase and my balance on october 1st is now $1500. If I send them a payment of $1k, am I ok or will they split the payment between due amount and "not yet due" amount?

Hope I am clear enough.
The payment will go towards that 1k statement assuming the transactions were all of the same nature (ie: purchases vs. cash advances).
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Mirage04 wrote: The payment will go towards that 1k statement assuming the transactions were all of the same nature (ie: purchases vs. cash advances).
nice good to know.
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