topic Trailing Interest question in Credit Cards

Trailing Interest question

EaglesFan2006 — Thu, 11 Mar 2021 12:55:39 GMT

Drawing a blank here...but i consolidated debt and paid off cards. I know that when the next statements cut i'll have some trailing interest that accrued before payoff. Question is in order to avoid more interest do I have to pay it the same day the statement cuts or do i have the same 'grace period' that corresponds to the card if I pay it a week later

IE - Capital One card statements cuts on the 15th with residual interest of $30 after paying off card and the due date is the 8th of the next month. If I pay the $30 anywhere between the 15th and 7th that should clear to a true $0 right?

Re: Trailing Interest question

FinStar — Thu, 11 Mar 2021 14:55:38 GMT

@EaglesFan2006 wrote:
Drawing a blank here...but i consolidated debt and paid off cards. I know that when the next statements cut i'll have some trailing interest that accrued before payoff. Question is in order to avoid more interest do I have to pay it the same day the statement cuts or do i have the same 'grace period' that corresponds to the card if I pay it a week later

IE - Capital One card statements cuts on the 15th with residual interest of $30 after paying off card and the due date is the 8th of the next month. If I pay the $30 anywhere between the 15th and 7th that should clear to a true $0 right?

Correct. Whatever trailing balance cycles on the statement date, you can PIF before the 8th. Just don't place any transactions during this timeframe.

Re: Trailing Interest question

Aim_High — Thu, 11 Mar 2021 17:19:46 GMT

@FinStar wrote:
@EaglesFan2006 wrote:
Drawing a blank here...but i consolidated debt and paid off cards. I know that when the next statements cut i'll have some trailing interest that accrued before payoff. Question is in order to avoid more interest do I have to pay it the same day the statement cuts or do i have the same 'grace period' that corresponds to the card if I pay it a week later

IE - Capital One card statements cuts on the 15th with residual interest of $30 after paying off card and the due date is the 8th of the next month. If I pay the $30 anywhere between the 15th and 7th that should clear to a true $0 right?
Correct. Whatever trailing balance cycles on the statement date, you can PIF before the 8th. Just don't place any transactions during this timeframe.

That's true.

When I've been in similar cases, I have tried to zero out the balance as close as possible to zero to avoid the whole trailing interest issue. There's a couple of ways to do this.

With a phone call to customer service the day you want to make a payment, they can probably tell you what the "Payoff Amount" would be as long as payment is credited by close-of-business.

Or, you can make a pretty educated calculation by dividing the interest rate by 365 to get a daily interest rate; then multiplying by the number of days you've carried that balance. For example, my last statement balance was $5,000. I want to pay off the balance 14 days after the statement cut date. My interest rate is 15% annually. 15% expressed as 0.15/365 works out to 0.000410958904109589. $5,000 x 0.000410958904109589 = about $2.05 per day interest (or more precisely 2.054794520547945.) I'll owe approximately 14 x $2.05 in interest. Using the full daily number above that works out to just under $28.77. So a total payment of $5,028.77 should be pretty close to a complete payoff. If you'll be using the card again soon, you can just pay an extra couple of dollars to ensure a credit balance. If you create an over/under payment this way, it will probably be a matter of well under a dollar.

Re: Trailing Interest question

EaglesFan2006 — Thu, 11 Mar 2021 18:07:44 GMT

Thanks all. I'm fine paying the trailing interest after the statement cuts, I just wanted to make sure I wasn't going to be stuck in a loop where interest kept accruing.