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Valued Contributor
ryanbush
Posts: 1,292
Registered: ‎08-19-2012
0

Re: Residual Interest


Simply827 wrote:

ryanbush wrote:

youngandcreditwrthy wrote:
Isn't there a 25-30 day grace period in which no interest charge? "Float" if you will?

Check your cardmember agreement op!!

NO, if you don't pay your balance in FULL the grace period goes away.  the OP stated he had been carrying a balance.

 

For example if you had been carrying a balance for say 6 months,  you're statement cuts on the 15th and you PIF on the 25th.  You still owe them for the interest on your balance between the 15th and the 25th.  that interest charge will be on your next statement


Why wouldn't the charge for that interest show up in the "Current Balance" Line? Do they not formally charge it until the next statement cuts?

 

I'm glad I'm learning about this. I'll be sure to check my accounts even after I PIF.


Credit cards charge you interest based on your average daily balance....

For the sake of explaining lets say you're statement is 20 days, you have a balance of 2k for the first 10 days and you pay 500 of that balance off on day 10 of your statement...  Your average daily balance for that statement would be 1750, they then charge you interest based on a balance of 1750 per day for 20 days (take you're interest rate and divide by 365. this is your daily rate.  Muliply that by 20(statement days) and that is your statement interest rate.)

 

so for example if you're interest rate was 15% in this case you would owe 14.35 in interest for that 20 day statement period.  they can't calculate this until your statement closes so this is when they charge it to you.

 

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Established Contributor
Simply827
Posts: 742
Registered: ‎10-15-2012
0

Re: Residual Interest


ryanbush wrote:

Simply827 wrote:

ryanbush wrote:

youngandcreditwrthy wrote:
Isn't there a 25-30 day grace period in which no interest charge? "Float" if you will?

Check your cardmember agreement op!!

NO, if you don't pay your balance in FULL the grace period goes away.  the OP stated he had been carrying a balance.

 

For example if you had been carrying a balance for say 6 months,  you're statement cuts on the 15th and you PIF on the 25th.  You still owe them for the interest on your balance between the 15th and the 25th.  that interest charge will be on your next statement


Why wouldn't the charge for that interest show up in the "Current Balance" Line? Do they not formally charge it until the next statement cuts?

 

I'm glad I'm learning about this. I'll be sure to check my accounts even after I PIF.


Credit cards charge you interest based on your average daily balance....

For the sake of explaining lets say you're statement is 20 days, you have a balance of 2k for the first 10 days and you pay 500 of that balance off on day 10 of your statement...  Your average daily balance for that statement would be 1750, they then charge you interest based on a balance of 1750 per day for 20 days (take you're interest rate and divide by 365. this is your daily rate.  Muliply that by 20(statement days) and that is your statement interest rate.)

 

so for example if you're interest rate was 15% in this case you would owe 14.35 in interest for that 20 day statement period.  they can't calculate this until your statement closes so this is when they charge it to you.

 


Thanks for that explanation


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