topic Re: How not to pay interest after the intro APR expiration date? in Credit Cards

How not to pay interest after the intro APR expiration date?

Paranoid — Wed, 04 Sep 2019 04:23:50 GMT

I have the promo APR expiration date on my Discover card on December 10, 2019. The last 2 months I’ve been carrying the balance. As I understand, now I have no grace period since one of the statements was not paid in full. The goal is to pay nothing of interest after December 10. If I pay the balance to zero before December 10, 2019, will I have a grace period again right after this? Or do I need to pay off the balance to zero by November 10, and then by December 10?

I am asking because I found the information that in order to stop paying residual interest, you need to fully pay statements for two months in a row. Or it is about paying statements in full but not to zero? Could someone explain this point in more detail please?

Re: How not to pay interest after the intro APR expiration date?

NRB525 — Wed, 04 Sep 2019 04:43:57 GMT

Your 0% interest period runs to December 10. Technically, you are correct that you are no longer in a "grace period", and technically Discover is charging you interest on the balances, as we speak. Interest of $0.00 to be exact.

The course of action you want to take is to time your payoff so that the card goes completely to zero by about December 8. This includes not introducing new charges, or including recent charges in that Paid to Zero on or about December 8.

Then let the account sit until the statement prints. Check that to see if any residual interest appears. If you've paid to zero by December 8, the answer should be no residual interest. If there is residual interest, it will likely be a very small amount. Pay it immediately to squash it.

Once that statement prints, then you are off and running with a new grace period timing.

Re: How not to pay interest after the intro APR expiration date?

Paranoid — Thu, 05 Sep 2019 03:44:57 GMT

Thank you, but to understand better, can I clarify? Let us suppose I have no introductory APR now.

The question is how to stop the accrual of interest and return the grace period.

PS. Ma actual cut date and promo APR expiration date are Dec 10th.

Re: How not to pay interest after the intro APR expiration date?

Remedios — Wed, 04 Sep 2019 12:25:16 GMT

OP, do you currently have 0% APR promo?
If you do, you are not accruing interest right now whether you paid in full or not.

Interest will be assessed on any charges made after promo expires, or if you do not PIF the amount on the last statement before promo expires.

Re: How not to pay interest after the intro APR expiration date?

AverageJoesCredit — Wed, 04 Sep 2019 12:30:18 GMT

My head hurts😥

Re: How not to pay interest after the intro APR expiration date?

Anonymous — Wed, 04 Sep 2019 12:39:00 GMT

I actually don’t think the grace period applies when you’re on a 0% intro specifically because if it was, you would run into the exact situation I think you’re describing where you pay your statement balance to take care of what you carried for the 0% promo but then get hit with interest charges immediately for not taking the card to $0 to reset the grace period you lost months ago.

Am I understanding the issue?

Re: How not to pay interest after the intro APR expiration date?

NRB525 — Wed, 04 Sep 2019 13:08:01 GMT

Once you don’t pay an entire statement balance by the payment due date you have lost the grace period. You begin to be charged interest on all balances from that day forward. Existing balances, and new charges. All of it. During a promo period the only difference is you are charged $0 of interest but you are still being charged interest.

In order to get the grace period back, you need to bring the actual card balance to zero. In some banks, you may have to do this twice, across Statement periods, due to trailing interest.

Bring the card balance to completely zero just before your promo APR expires, for best results. And that means no use of the card after that, until you are certain no trailing interest appears.

Re: How not to pay interest after the intro APR expiration date?

Anonymous — Wed, 04 Sep 2019 14:11:17 GMT

Greetings!

I got my Disco in Jan 2017 and my 0% apr expired in Jan 2018. I was concerned about this because I thought the apr was kind of high in comparison to my other cards. SO, I called them to get an apr reduction AND they offered me 0% for another year.

Re: How not to pay interest after the intro APR expiration date?

NRB525 — Wed, 04 Sep 2019 14:15:35 GMT

@Remedios wrote:
OP, do you currently have 0% APR promo?
If you do, you are not accruing interest right now whether you paid in full or not.

Interest will be assessed on any charges made after promo expires, or if you do not PIF the amount on the last statement before promo expires.

This wording could be improved

The interest begins being assessed on existing balances, as well as new charges, not just any new charges after the promo period.

And, in fact the OP is accruing interest, is being charged interest right now during the promo period. It is just at a 0% rate resulting in a $0 interest cost.

Re: How not to pay interest after the intro APR expiration date?

Remedios — Wed, 04 Sep 2019 15:27:28 GMT

@NRB525 wrote:
@Remedios wrote:
OP, do you currently have 0% APR promo?
If you do, you are not accruing interest right now whether you paid in full or not.

Interest will be assessed on any charges made after promo expires, or if you do not PIF the amount on the last statement before promo expires.
This wording could be improved
The interest begins being assessed on existing balances, as well as new charges, not just any new charges after the promo period.

And, in fact the OP is accruing interest, is being charged interest right now during the promo period. It is just at a 0% rate resulting in a $0 interest cost.

😒

Re: How not to pay interest after the intro APR expiration date?

Paranoid — Wed, 04 Sep 2019 16:44:13 GMT

Thanks everyone for the answers! Now I’m trying to figure out the general situation, without an intro APR period, especially, as it was said above, my interest is accrued and I lost grace period, but I have just 0 % APR at this moment.

@NRB525 wrote:
In order to get the grace period back, you need to bring the actual card balance to zero.

So I have to pay to zero before the statement cut date to have the statement balance of $0?

I have found the information, that a grace period will reset as well if I pay 2 statement balances in full consistently. Is that correct? So there are two options to reset the grace period (pay the balance to zero before a cut date or pay 2 statements in a row)?

Re: How not to pay interest after the intro APR expiration date?

Shooting-For-800 — Wed, 04 Sep 2019 22:08:31 GMT

Just pay it before statement is cut.

Even If you pay interest, it will not be much on small balance.

It is not back interest like a store card.

Re: How not to pay interest after the intro APR expiration date?

Paranoid — Wed, 04 Sep 2019 22:23:34 GMT

I opened last three statements, tried to figure it out - do not understand.

Jun 10 statement balance: 44.43
Paid: -56.46
Spent: 961.1
Jul 10 statement balance: 949.07 (44.43-56.46+961.1)
Paid: -44.06
Spent: 588.95
Aug 10 statement balance: 1493.96 (949.07-44.06+588.95)

But, in Aug 10 statement I see:
BALANCE SUBJECT TO INTEREST RATE: 1092.91. It was 0 in every statement before.

Question -- where did this amount come from?

Re: How not to pay interest after the intro APR expiration date?

NRB525 — Wed, 04 Sep 2019 23:14:48 GMT

The bank calculates an average daily balance during the period. Since your balance is on an increasing trend, it’s somewhere in between the prior statement balance and the latest statement balance.

The amount is an approximation of how interest is being calculated. The actual interest calculation is on a compounded daily rate, based on each day balance, but that may be too much info.

Re: How not to pay interest after the intro APR expiration date?

Paranoid — Thu, 05 Sep 2019 03:38:28 GMT

NRB525, thank you!

Re: How not to pay interest after the intro APR expiration date?

Paranoid — Thu, 05 Sep 2019 05:58:29 GMT

Finally I found a perfect picture explaining almost everything. The only question I have -- if I do not pay off the full balance to zero at the second orange Payment Due Date, but only the 2nd statement balance, and thus I stay owed $200, what is the difference? Will interest be accrued on that $200 right after I paid the 2nd statement balance?

And in other sources, I found information that if I do not pay the previous bill in full, then interest begins to accrue not from the due date, but from the very beginning of the billing cycle, which contradicts this picture above.

Re: How not to pay interest after the intro APR expiration date?

NRB525 — Thu, 05 Sep 2019 09:40:34 GMT

If you have a $200 balance when interest starts, a 20% APR will begin calculating interest at $0.001 per day. One tenth of a cent per day, or about $4 per month if you left it there. I think you should leave the $200 balance so you can see the interest at work. We can try to explain it, but no explanation gives the same educational quality as actual experience. A small balance experience is the way to go.

The discussion so so far has been about promotional interest periods. On credit cards, this usually means interest only begins after the expiration of the promo period. You have added comments asking about Deferred Interest. The most common example is a furniture store that sells on a long term zero interest “plan”. If you do not pay every last dime of the furniture cost ( or whatever you bought ) by the end of the Deferred Interest period, all ( ALL! ) that Deferred Interest is reassessed for the entire time you thought you were getting zero interest cost. Nasty.

Re: How not to pay interest after the intro APR expiration date?

Paranoid — Thu, 05 Sep 2019 15:12:16 GMT

My question was a little about something else. Not about how to calculate interest from $200 (it is not a problem at all), but whether this interest WILL be charged. In fact, the topic quickly went into another question, and I have not received an answer to it. I will then create another topic with the question that interests me now. I thought we could continue here. I just wanted to figure out at what exact moment interest begins to be accrued, and what is the trigger to stop accruals of this interest. Everything about the promo intro APR has long been clear.

Re: How not to pay interest after the intro APR expiration date?

Anonymous — Thu, 05 Sep 2019 15:23:56 GMT

Interest begins to accrue the day that your grace period is over and is compounded daily based on the balance on the card each day, including the interest already charged.

Re: How not to pay interest after the intro APR expiration date?

Paranoid — Thu, 05 Sep 2019 17:22:59 GMT

Thank you, I started a new topic with questions that interest me, so that the title and the first post of this topic do not confuse anyone.