I'm not following what it is that you are saying Discover does that is different than other card companies. Can you give an example with date of purchase, date of statement, due date, and how much you paid and when, and how much interest gets charged?
Ok, let's say I have a BoA credit card and let's say I carry a $20 balance from the previous month. BoA charges the minimum finance charge for that previous month. Then, I pay off that amount. Now, I'm using the BoA card as my primary card, so I use it during the current month to run up $2000 in charges, but pay off the entire amount before the statement date. Bank of America doesn't charge me any interest for the month, since the entire balance was paid off before the statement date.
With Discover, let's say I do the same thing: I carry a $20 balance from the previous month. Discover charges me $2.00 as a minimum finance charge. So, I pay off this finance charge and I use the Discover card for charges all during the new month and run up $2000. I pay off the entire balance before the statement date. Unlike the BoA card, Discover averages the amount per day that I carried on the card all during the month and charges me interest at the end of the month based on this average (with the minimum finance charge being $2.00). This is different than what the BoA card did when I paid the balance in full before the statement date.
If you carry a balance from the previous month on a Discover card, cardholders are charged daily residuals even if they pay off the balance in full before the statement date. This is similar to how Credit One Bank charges its cardholders, but with Discover this only happens if you carry a balance from the previous month.
Does that make more sense?
So basically I think you are saying on Discover:
jan 1: statment #1 cuts, $125 balance, payment due jan 25, you pay minimum of $25 on jan 24 leaving $100
jan 29 you pay the balance of $100 before the new statement cuts
feb 1: statement #2 cuts, you are charged daily interest for all purchases made between jan1-jan 29 (or 30)
I would have assumed that most/all CCCs calculated it the way Discover does but I've never run into this situation that I can recall. Anytime I've carried a balance that I don't PIF by the due date , I have never paid the rest of the balance before the statement cuts. Am I right that the other CCCs will charge daily interest on the charges above from jan 1-30 if you didn't pay the remaining balance before statement #2 cut?
- My last question is at what point does a credit card start charging interest? For instance, on one of the cards my statement cut and the balance was 55.00 with a minimum payment of 25.00 due by Oct. 10th. I paid 25.00 the same day the statement hit and am going to pay the remaining 30.00 on Friday. So has the interest started because I did not pay the full balance originally or would it start if not paid in full by the 10th?
Most all CC with grace periods work this way.
Assume you close on 30th, due date is 25th.
June , you charge $200 and statement closes on June 30.
If you pay $200 by July 25th, there will be no interest, regarless of any other charges in July.
If you pay $25 by July 25th, then when statement closes on July 30, interest will be charged. It will be based on the average daily balance of July period. So charges made during this period are included in interest calculation. From now on, extra charge will incur interest until you get back into PIF by due date.
Note that it will take 2 months to get back to $0 interest unless you PIF before statement closes. This part is very confusing and may explaiin the big preceding discussions.