topic Re: How does Capital One charge interest? in Credit Cards

How does Capital One charge interest?

Anonymous — Thu, 18 Feb 2016 17:38:24 GMT

This is the first time I have ever been charged interest. I've carried balances before but only with a 0% interest promo. This month I left a $300 balance on one of my cards (all others PIF) and that statement cut yesterday. I logged in to pay and the balance is now $305.49. If I PIF today, versus if I PIF by due date, versus if I pay some of the balance, what will the interest do? Does it add to the balance each day or just monthly? What about the grace period? I read somewhere that it is forfeited once interest is charged.

Sorry if I'm asking the obvious. Tried to research and got lost in all the info.

Re: How does Capital One charge interest?

Anonymous — Thu, 18 Feb 2016 18:00:41 GMT

Look at your statement, it gives you an in detail look at how they charge interest.

Re: How does Capital One charge interest?

kuku4koco — Thu, 18 Feb 2016 18:00:51 GMT

Some cards may automatically charge interest and some cards may not charge interest, as long as you do not use the card you've carried a balance on... It really depends on the information in your Card Agreement. No one will be able to tell you the terms of YOUR card agreement. Not everyone's is the same.

Re: How does Capital One charge interest?

Anonymous — Thu, 18 Feb 2016 18:19:14 GMT

Ya, just read the fine print where it shows the APR and fees and stuff. Usually if you PIF by the due date, you will not have to pay for the next statement, nor interest. Only get charged interest if any balance is left on the card. interest is calculated by daily average balance and thats how they get your APR if it is variable. If your APR is fixed then it will be based on your fixed APR. if it is variable then it will be the former I explained. Just read and it should tell you how it works. Might also tell you behind your statement.

Re: How does Capital One charge interest?

Chris679 — Thu, 18 Feb 2016 20:01:26 GMT

They likely charge interest on the average daily balance. Paying off sooner will limit the interest you are going to pay. Grace period is most likely gone until you pif for two consecutive statements. Read your cardholder agreement to be sure.

Re: How does Capital One charge interest?

NRB525 — Thu, 18 Feb 2016 20:46:15 GMT

With CapOne, I think if you now pay it all by the payment due date, and don't add new charges, you may not have additional interest in this cycle.

I have run some small BT items onto my QS. The BT amount was $400 onto the card, which reported on the statement, with no interest charges.

The auto payment of $212 paid in the next period, and there was a small interest cost, but only for month 2.

The auto payment then took care of the remaining balance during month 3, so that 3rd statement had zero ending balance, and no additional interest cost.

This has worked the same way twice, each time the last month with no interest when it was paid to zero by the due date, statement at zero. Other banks do that last month with additional, trailing interest, even if you've paid it to zero by the due date. It's a fun CapOne feature.

Re: How does Capital One charge interest?

bada_bing — Thu, 18 Feb 2016 22:01:02 GMT

Interest charges and the mechanics of restoring the grace period are compilicated, seemingly intentional so.

Once you've lost the grace period (which it appears you have), you will be accruing interest daily. That includes

new purchases from the day of the transaction posting. So it will save ongoing interest to pay as much as

possible as soon as possible. From an interest standpoint , when you don't have a grace period, paying as soon as

you have the money saves as compared with waiting for the due date to roll around.

To restore the grace period, most of the major issuers require 2 cycles of paying the entire amount due. This gets

a little confusing. The amount due is the previous statement balance, not the total owed on the card which

may include charges made since the last statement and daily acruing interest. You likely will have a difficult time

paying a card that has lost it's grace period down to exactly $0, because the payoff amount is changing daily with

interest charges. The easiest way to eliminate interest is to overpay a bit for the month (may require a "push"

payment). Otherwise it is likely you'll get hit with a small dailt amounts of "residual interest" until the grace period is

restored, which may be an acceptable choice given the difficulty of tracking the exact daily balance and timing

it with a payment.

All in all, loosing a card's grace period by carrying a balance past the due date is a hassle and costs money.

Much better to avoid it happening if at all possible. The grace period is one of the more rewarding perks of using

a credit card. As an example, a typical account that charges $1500 a month and would be subject to an APR of

13% without the grace period, saves about $190 a year just from the grace period. It also is much less complicated

tracking balances on a card with an intact grace period.

Re: How does Capital One charge interest?

lg8302ch — Thu, 18 Feb 2016 22:41:01 GMT

$0.00 Minimum Payment Pay this by your due date to avoid late fees.
$0.00 Interest Saver Payment Pay this by your due date to avoid interest on new purchases shown on your next statement, while still carrying a promotional balance.

I have seen two minimum payment options on my account and never bothered to find out what exactly this is but it could be the option to select Interest Saver Payment and maybe there is no interest on new charges then? Maybe I am going to do a small test with this feature and see what happens ...I am just curious as I have not realized this payment option before ..maybe new ?

Re: How does Capital One charge interest?

NRB525 — Fri, 19 Feb 2016 03:53:20 GMT

@lg8302ch wrote:
$0.00 Minimum Payment Pay this by your due date to avoid late fees.
$0.00 Interest Saver Payment Pay this by your due date to avoid interest on new purchases shown on your next statement, while still carrying a promotional balance.

I have seen two minimum payment options on my account and never bothered to find out what exactly this is but it could be the option to select Interest Saver Payment and maybe there is no interest on new charges then? Maybe I am going to do a small test with this feature and see what happens ...I am just curious as I have not realized this payment option before ..maybe new ?

Looks like a good feature to test out. You may have to start now by putting a "promotional balance" on your card, then some new charges, prior to the statement print.

Chase Blueprint, on their non-cobranded cards, has a feature you can have it PIF selected categories of new charges, to leave a BT on a glidepath, such as a low APR BT. I tried that and it worked well.

Re: How does Capital One charge interest?

Anonymous — Fri, 19 Feb 2016 12:55:33 GMT

Thanks everyone! I'm starting to understand interest a little better now (so much to know!)

I think I will continue to PIF each month unless I have a special promo offer, just to keep things simple. Capital One's interest rates are high! Luckily I have a small balance

Re: How does Capital One charge interest?

Mantis350 — Fri, 19 Feb 2016 15:37:21 GMT

So just as a data point. I got my statement cut dates confused about 2 months ago with my Cap1 card and called them to inquire as to the interest charge. The CSR informed me of the policy and actually credited the interest charge to my account (it was right around $37). I've had a very good relationship with them and always PIF so maybe with my record with them, they just wanted to keep me happy. I suggest you call if you really want to try to get the credit but YMMV and I know what they did for me was above and beyond but it never hurts to call.

Re: How does Capital One charge interest?

Ghoshida — Fri, 19 Feb 2016 19:29:45 GMT

@Anonymous wrote:
This is the first time I have ever been charged interest. I've carried balances before but only with a 0% interest promo. This month I left a $300 balance on one of my cards (all others PIF) and that statement cut yesterday. I logged in to pay and the balance is now $305.49. If I PIF today, versus if I PIF by due date, versus if I pay some of the balance, what will the interest do? Does it add to the balance each day or just monthly? What about the grace period? I read somewhere that it is forfeited once interest is charged.

Sorry if I'm asking the obvious. Tried to research and got lost in all the info.

Some generic suggestions, without knowing all about your particular card's T&C.

(1) If you can, pay up the entire $305.49 now. If not, pay as much as you can now, and by all means pay up the remaining no later than the due date.

(2) If you can, move your new purchases to your other cards or cash. If not, try to pay the new purchases by the due date as well. Try your best to let Cap One post a $0 statement next time.

(3) If they still charge an interest on your next bill when you have $0 statement, send them a secure message / ask through chat to remove that interest as a one-time favour and restore the grace period. You should be golden that point onwards.