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View Full Version : I have a credit card interest question.....


Jennabeth
03-07-2011, 03:14 PM
and I know there are some really knowledgeable people here. I have a cc with a balance. I charged something else last week, after the statement closed. I am planning on paying off the existing balance this month. Will I be charged interest on the charge from last week even though it won't show up until April's bill? I can pay everything off this month, just trying to figure out if I need to. Can't wait to have this card paid off! Thanks!

HeatherC
03-07-2011, 03:23 PM
Yes, I believe they will charge you interest and send you a statement next month. What you can do is call and ask them for the total payoff amount. The amount they quote you should be good until a certain date.

Marionnette
03-07-2011, 03:47 PM
and I know there are some really knowledgeable people here. I have a cc with a balance. I charged something else last week, after the statement closed. I am planning on paying off the existing balance this month. Will I be charged interest on the charge from last week even though it won't show up until April's bill? I can pay everything off this month, just trying to figure out if I need to. Can't wait to have this card paid off! Thanks!
Charges made on your account after the billing cycle closes will go on your next statement. You will not acrue interest on those charges unless you fail to pay them in full when your next statement (not the current statement) is due. It's what is commonly referred to as the grace period.

Anthony1971
03-07-2011, 04:53 PM
I think both anwers to be true you need to read your agreement or call...
from my understanding most cards do charge interest on new purchases when a balnce is carried but I am sure there are some that do not as well....

wvjules
03-07-2011, 04:54 PM
Charges made on your account after the billing cycle closes will go on your next statement. You will not acrue interest on those charges unless you fail to pay them in full when your next statement (not the current statement) is due. It's what is commonly referred to as the grace period.

^^^What she said!

Green Tea
03-07-2011, 06:04 PM
If you have 2 cycle billing, I think you will have additional interest. Disney Visa has or had that. It might have been eliminated in the credit card overhaul.

HeatherC
03-07-2011, 07:49 PM
The reason I posted yes they will charge interest is because this JUST happened to us with our Amex card in January. We paid the bill in total but there was one pending charge that hadn't shown up yet by the statment closing date. In February we got another bill for that pending charge ALONG with added interest for that one charge.

Maybe your card is different, but I think this is another way for them to keep making money off you.

Marionnette
03-07-2011, 09:22 PM
If you have 2 cycle billing, I think you will have additional interest. Disney Visa has or had that. It might have been eliminated in the credit card overhaul.
Two cycle billing is illegal under the Credit Card Reform Act.

The reason I posted yes they will charge interest is because this JUST happened to us with our Amex card in January. We paid the bill in total but there was one pending charge that hadn't shown up yet by the statment closing date. In February we got another bill for that pending charge ALONG with added interest for that one charge.

Maybe your card is different, but I think this is another way for them to keep making money off you.
Did you pay the balance off in full with the December statement? You lose the grace period and can begin acruing interest from the day a charge is made if you carry a balance with some cards. The actual charge doesn't show up on your statement until one bill later. So if you didn't pay December's in full (or were even a day late paying it), then you lost the grace period for January's charges. When January's bill was generated, everything on it was subject to an interest charge calculated from the day that the charge was processed. Even if you paid that bill in full by its due date, the next statement would show the interest assessed for those charges.

Credit cards will also start charging you interest from the day 1 on any balance transfers, cash advances or purchases that are processed as a debit instead of credit. So even if you are very conscientious about paying your bill on time and in full each time, you could find yourself paying a little finance fee if your transaction was one of these.

Those could be a couple of reasons why you saw a finance charge on your February statement. If neither of those cases apply to your situation, you might want to give AmEx a call and aske them to explain the charge.

Jennabeth
03-08-2011, 08:27 AM
Did you pay the balance off in full with the December statement? You lose the grace period and can begin acruing interest from the day a charge is made if you carry a balance with some cards. The actual charge doesn't show up on your statement until one bill later. So if you didn't pay December's in full (or were even a day late paying it), then you lost the grace period for January's charges. When January's bill was generated, everything on it was subject to an interest charge calculated from the day that the charge was processed. Even if you paid that bill in full by its due date, the next statement would show the interest assessed for those charges.

This is what I'm afraid of. Maybe I'll just pay the whole thing off and be done. I hate to lose the grace period, especially since I get a pretty good interest rate on my checking account and would like that extra 28 days of interest, I don't want to pay any more. It is a Disney Visa and I know Chase can be tricky. I would check my agreement, but it's been so long I'm not sure where it is, plus I know it may now be different than the original agreement.

mom2kazkids
03-08-2011, 08:49 AM
Charges made on your account after the billing cycle closes will go on your next statement. You will not acrue interest on those charges unless you fail to pay them in full when your next statement (not the current statement) is due. It's what is commonly referred to as the grace period.

What she said. We have a Disney Visa, and pay it off every month and there has been a time in the past that I paid off the next months balance before the statement ended and was not charged interest.

dd50
03-08-2011, 10:08 AM
Charges made on your account after the billing cycle closes will go on your next statement. You will not acrue interest on those charges unless you fail to pay them in full when your next statement (not the current statement) is due. It's what is commonly referred to as the grace period.

This is the correct answer.

Jennabeth
03-08-2011, 10:12 AM
What she said. We have a Disney Visa, and pay it off every month and there has been a time in the past that I paid off the next months balance before the statement ended and was not charged interest.

But did you carry a balance for a few months? I'm worried that because I have a balance that has carried over for a few months, I no longer get a grace period. I thought I read that you only get a true grace period if you start the month with a zero balance.

Marionnette
03-08-2011, 10:51 AM
But did you carry a balance for a few months? I'm worried that because I have a balance that has carried over for a few months, I no longer get a grace period. I thought I read that you only get a true grace period if you start the month with a zero balance.

This isn't true. We always have transactions that appear on our account that post between the closing date and the day that the statement is generated. So theoretically, we always begin the month with a balance.

What we don't do, is carry a balance forward from one month to the next. So we never pay interest on the charges.

Let me see if I can explain it better.
Month #1: You get your bill with a due date that is about 2 weeks into the future. Instead of paying it right away, you wait until the day it is due and pay half of the balance.
Month #2: You get your next statement and it shows the new charges you made plus the balance carried from the previous month and the interest charged thru your closing date on the average daily balance from the previous month. This time you pay the full amount due but again you wait until the due date to take care of it.
Month #3: Your new statement arrives. It shows that you paid off the previous charges and so there is no balance carried forward. Your new charges also appear if there are any. But then there will be finance fees assessed because there is still interest that has to be paid on the charges from Month #1 which didn't get paid until just before the closing date. Remember, you are responsible for the interest on the average daily balance until the principle is paid off. There is still interest acruing on those charges between the day that the billing cycle from Month #2 was begun and the day when you finally paid for those charges.

How do you avoid all of this? By paying the balance in full and on time every month. But if you don't pay it in full, then make your payments as soon as you can each billing cycle so that your average daily balance is as small as possible. Don't wait until the due date to pay because that just jacks up the interest charged.

Green Tea
03-08-2011, 01:57 PM
But did you carry a balance for a few months? I'm worried that because I have a balance that has carried over for a few months, I no longer get a grace period. I thought I read that you only get a true grace period if you start the month with a zero balance.

I still think there will be interest because you did not start with a zero balance. You are paying off the balance THIS month. But with a new item already charged, I feel like there will be the average daily balance thing coming into play. If you had paid off everything before the statement closed, then I think there wouldn't be an additional fee. But it will be less, because the ADB is less once you make a payment.

seashoreCM
03-08-2011, 01:58 PM
Generally if you pay off the entire billed balance now but did not pay off the entire balancelast month, there may be leftover interest from the time the bill was printed to the time you paid it off, showing up on your next bill. But new purchases since that last bill should still have grace periods.

Green Tea
03-08-2011, 01:59 PM
This isn't true. We always have transactions that appear on our account that post between the closing date and the day that the statement is generated. So theoretically, we always begin the month with a balance.

What we don't do, is carry a balance forward from one month to the next. So we never pay interest on the charges.



This is why I think the OP will have finance charges on the new purchase. She was still carrying a balance when the current statement closed.

prncess674
03-08-2011, 08:36 PM
How do you avoid all of this? By paying the balance in full and on time every month. But if you don't pay it in full, then make your payments as soon as you can each billing cycle so that your average daily balance is as small as possible. Don't wait until the due date to pay because that just jacks up the interest charged.
So true!