Credit Cards

I can't understand why I am paying that interest

  • Last Updated:
  • Feb 28th, 2017 10:12 pm
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[OP]
Newbie
Feb 27, 2017
1 posts

I can't understand why I am paying that interest

Hi guys,

I am not very experienced with credit cards in Canada, and it was my first time ever that I won't be able to pay the total amount of my credit card. As you can see in the image below, from my previous balance $1,445.68, I paid out $910, so I still own $535.68 to CIBC Visa.

They charged me 34.60 as interest since my last payment due Feb 25, and I can not understand why. Is someone able to tell me why I am paying this, I thought that would be no more than 10 dollars.

As I mentioned I do not very well how credit cards works here.

Please see the image attached to see part of my statement.
Screen Shot 2017-02-28 at 01.29.56.png
4 replies
Jr. Member
Jan 16, 2017
147 posts
39 upvotes
You have to pay off your entire balance each month by the due date to avoid interest charges.
Newbie
User avatar
Oct 25, 2016
48 posts
58 upvotes
your interest is 20% and interest is charged from the date you purchased the item. Also may be they charged interest on full amount then deducted the amount you paid. anyways, this is how credit card make money. never buy anything using credit card if cannot payback in full at the end of billing cycle.
Deal Guru
User avatar
Aug 8, 2012
10198 posts
4006 upvotes
BC
nelsonsauer wrote: Hi guys,

I am not very experienced with credit cards in Canada, and it was my first time ever that I won't be able to pay the total amount of my credit card. As you can see in the image below, from my previous balance $1,445.68, I paid out $910, so I still own $535.68 to CIBC Visa.

They charged me 34.60 as interest since my last payment due Feb 25, and I can not understand why. Is someone able to tell me why I am paying this, I thought that would be no more than 10 dollars.

As I mentioned I do not very well how credit cards works here.

Please see the image attached to see part of my statement.
Screen Shot 2017-02-28 at 01.29.56.png
Bad news. Your $851 of new purchases are also accruing 19.99% interest daily from the day of each purchase.

As for your interest calculation ... $1445 purchases x 19.99% x average of maybe 36 days / 365 annualized = $28.49 ... so I guess your average of purchases was more in the first 15 days of the 30-day cycle than the midpoint.

I got to 36 by averaging the mid-point of the 30-day statement cycle (15 days) and then adding the 21 days after that until you likely paid your bill (21-day "interest-free grace period" ... which is ONLY interest-free IF you pay it off IN FULL, otherwise ... interest!)
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