topic Credit card interest on new purchases in Credit Cards

Credit card interest on new purchases

red259 — Wed, 11 Mar 2015 19:35:21 GMT

I thought I understood this but just want to clear something up. I carried a balance for about a week and have now paid the entire card down to zero (balance is showing zero). If I make new purchases this cycle and PIF by the statement cut date will I get hit with any interest on the new purchases?

Re: Credit card interest on new purchases

VirusCredit13 — Wed, 11 Mar 2015 20:02:48 GMT

Depends on the card. You will have to tell us what card it is or look at your cardmember agreement.

With the Prime/good cards you can make purchases up to your limit. Whenever your statement hits, lets say 4/1/15, that balance becomes your statement balance. Say that balance was $1000, if you pay that balance off completely before the next statement, say 5/1/15, you won't have to pay interest. Any balance you don't pay off of the 4/1 statement will have interest charged for it on the 5/1 statement.New purchases between 4/1 and 5/1 won't have interest charged on it. So in your example of paying your balaance off and then making purchases, no you won't be hit with any interest.

With subprime/bad(although neccasry for some) you start accuring interest from the time you make the purchase. So regardless of when you make your payment, and make new purchases, interest starts being charged immediately.

If you have a card from one of the big banks/cc companies(Chase, Wells, BofA, Amex, Discover), assume your in first scenario. If you have a card from a CreditOne/First Premier/Matrix assume your in second scenario.

Re: Credit card interest on new purchases

chwebb1 — Wed, 11 Mar 2015 21:28:57 GMT

@VirusCredit13 wrote:
Depends on the card. You will have to tell us what card it is or look at your cardmember agreement.

With the Prime/good cards you can make purchases up to your limit. Whenever your statement hits, lets say 4/1/15, that balance becomes your statement balance. Say that balance was $1000, if you pay that balance off completely before the next statement, say 5/1/15, you won't have to pay interest. Any balance you don't pay off of the 4/1 statement will have interest charged for it on the 5/1 statement.New purchases between 4/1 and 5/1 won't have interest charged on it. So in your example of paying your balaance off and then making purchases, no you won't be hit with any interest.

With subprime/bad(although neccasry for some) you start accuring interest from the time you make the purchase. So regardless of when you make your payment, and make new purchases, interest starts being charged immediately.

If you have a card from one of the big banks/cc companies(Chase, Wells, BofA, Amex, Discover), assume your in first scenario. If you have a card from a CreditOne/First Premier/Matrix assume your in second scenario.

To add to that, Barclaycard and Citi are both in the first scenario as well, as long as you PIF, there's no interest charged on purchases.

Re: Credit card interest on new purchases

CH-7-Mission-Accomplished — Wed, 11 Mar 2015 22:54:23 GMT

Tiny correction with this example. The 4/1 balance would have to be paid in full by the April due date, probably around 4/25. If you wait until the 5/1 statement cuts you will pay interest under a 25 day grace period regular card. Just want to be sure OP understands correctly!

Re: Credit card interest on new purchases

chwebb1 — Thu, 12 Mar 2015 00:58:11 GMT

@CH-7-Mission-Accomplished wrote:
Tiny correction with this example. The 4/1 balance would have to be paid in full by the April due date, probably around 4/25. If you wait until the 5/1 statement cuts you will pay interest under a 25 day grace period regular card. Just want to be sure OP understands correctly!

Unless it's a Discover card. They give you around two months of grace. My statement cuts on the 2nd of the month, so if I were to buy something on let's say 3 March, I have until 1 May to pay it off without interest.

Re: Credit card interest on new purchases

Anonymous — Thu, 12 Mar 2015 01:16:57 GMT

I think OPs concern is justified. For example, from:

https://www.discover.com/credit-cards/cardmember-agreement/payments.html

How We Apply Payments May Impact Your Grace Period

If you do not pay your New Balance in full each month, then, depending on the balance to which we apply your payment, you may not get a grace period on new Purchase

So there are at least some situations with "good" cards where you do get charged interest from purchase date if you carry a balance. I( think this is true on most cards in fact, which is why I am surprised by some of the responses)

Re: Credit card interest on new purchases

Anonymous — Thu, 12 Mar 2015 01:35:38 GMT

@Anonymous wrote:
I think OPs concern is justified. For example, from:

https://www.discover.com/credit-cards/cardmember-agreement/payments.html

How We Apply Payments May Impact Your Grace Period
If you do not pay your New Balance in full each month, then, depending on the balance to which we apply your payment, you may not get a grace period on new Purchase

So there are at least some situations with "good" cards where you do get charged interest from purchase date if you carry a balance. I( think this is true on most cards in fact, which is why I am surprised by some of the responses)

I've never seen a card that gave you a grace period without your most recent statement balance being PIF. I'd be happy to see a counter-example though.

Re: Credit card interest on new purchases

CH-7-Mission-Accomplished — Thu, 12 Mar 2015 01:37:37 GMT

If you pay the new charges by the due date you won't pay interest on the new charges, only on the carryover balance. The new charges are not subject to interest during the 25 day grace period.

Re: Credit card interest on new purchases

VirusCredit13 — Thu, 12 Mar 2015 01:53:04 GMT

@CH-7-Mission-Accomplished wrote:
Tiny correction with this example. The 4/1 balance would have to be paid in full by the April due date, probably around 4/25. If you wait until the 5/1 statement cuts you will pay interest under a 25 day grace period regular card. Just want to be sure OP understands correctly!

This is correct, I should said when due date was, which in my example I guess would of been when the next statement cut. But your example is better since it usualy is like 25 days after statement.

Re: Credit card interest on new purchases

Anonymous — Thu, 12 Mar 2015 02:01:34 GMT

@CH-7-Mission-Accomplished wrote:
If you pay the new charges by the due date you won't pay interest on the new charges, only on the carryover balance. The new charges are not subject to interest during the 25 day grace period.

That is what is in dispute. And the quote from Discover shows that that is not always true.