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Interest Confusion

New Contributor

Interest Confusion

I'm confused.....I paid $459 off of my Capital One card to leave $35 balance to report giving me less than 9% utilization.  Yet my interest charged is still $3.64??  The card has an interest rate of 13.94%.  I dont understand how they are getting $3.64 of interest on a $35 balance.  Am i missing something?

 

2/18/15 via Discover's FICO 649
3/11/15 via Walmart's FICO 692
Cap One Platinum $2250 Discover $700 VS $2350 Belk $700 Care Credit $6,200-co-app w/ husband Walmart $650 Cap One $2250 Plat Prestige $1,000 Chase Freedom $7000 AmEx $1500
Message 1 of 7
6 REPLIES
Super Contributor

Re: Interest Confusion


determinedchick wrote:

I'm confused.....I paid $459 off of my Capital One card to leave $35 balance to report giving me less than 9% utilization.  Yet my interest charged is still $3.64??  The card has an interest rate of 13.94%.  I dont understand how they are getting $3.64 of interest on a $35 balance.  Am i missing something?

 


The month before did you also leave a balnace?

And if so did you pay all current monthly charges plus the balance from last month?

Before you app think...
Have you done your research of the CC?
Does it fit your spending?
Do you have a plan for the bonus w/o going into debt?
Can you afford the AF?
Do you know the cards benefits? Is it worth the HP?
Message 2 of 7
Regular Contributor

Re: Interest Confusion

That's residual interest, even though the balance was paid off they still charge you interest for the days after the statement cut.

Message 3 of 7
Senior Contributor

Re: Interest Confusion


Awesomely wrote:

That's residual interest, even though the balance was paid off they still charge you interest for the days after the statement cut.


+1

 

Plus any other balance you may have carried from the previous billing cycle.  If you don't want to incur any finance charges, then the best method is to PIF.  If you want to leave $35 (for reporting purposes) during the current statement cycle, then you need to make sure your previous statement/billing had a $0 balance, otherwise the finance charge fairy will leave you with a nice surprise when your current statement cuts.

Message 4 of 7
Super Contributor

Re: Interest Confusion

Check your T&C. They might be doing interest calculations on average daily balance as well.
JPMorgan Palladium (100k), AmEx Platinum (NPSL), AmEx SPG (46k), AmEx BCP (42k), Chase Sapphire Preferred (47k), Citi Prestige (31k), Citi Thank You Preferred (27k), Citi Executive AAdvantage (25k), JPMorgan Ritz-Carlton (21k), Merrill+ (15k), US Bank Cash+ (22.5k), Wells Fargo (12k), Bloomingdale’s (12.4k), Chase Freedom (5k), Discover IT (5k).
Message 5 of 7
Frequent Contributor

Re: Interest Confusion

+1

 

It's usually average daily balance that gets you, NOT the interest on the small amount that wasn't paid off.

 

Based on your info provided, I estimed your average daily blance was about $313 for each day in your statement period.

 

Even if your average daily balance was $35, there can also be a minimum finance charge.

FICO June '15: EX 800, EQ 822, TU 823

Message 6 of 7
New Contributor

Re: Interest Confusion

Thanks for the replies, i've got much to learn.  

 

The average daily balance sounds right, i didn't know thats how it was calculated..

2/18/15 via Discover's FICO 649
3/11/15 via Walmart's FICO 692
Cap One Platinum $2250 Discover $700 VS $2350 Belk $700 Care Credit $6,200-co-app w/ husband Walmart $650 Cap One $2250 Plat Prestige $1,000 Chase Freedom $7000 AmEx $1500
Message 7 of 7