topic Re: Quick question about interest charges in Credit Cards

Quick question about interest charges

pip3man — Sun, 09 May 2021 12:37:54 GMT

At what point are interest charges triggered? Is it if the balance is not paid in full by the due date or by the statement closing date. So say I make a minimum payment on the due date and then two days later paid off the entire balance before the statement closing date, will interest still be charged?

Re: Quick question about interest charges

Horseshoez — Sun, 09 May 2021 13:11:32 GMT

@pip3man wrote:
At what point are interest charges triggered? Is it if the balance is not paid in full by the due date or by the statement closing date. So say I make a minimum payment on the due date and then two days later paid off the entire balance before the statement closing date, will interest still be charged?

I suspect you're not going to like this answer, but, "It depends". The fact is, different credit cards have different terms regarding when interest starts accruing; some start racking up the interest the moment the charge clears, others charge no interest if the card is paid in full by the due date, and then only start adding it on for the remaining unpaid balance.

For each of your cards you should be able to visit their online sites and look at the Terms of the card; the method for calculating interest will be fully spelled out in each statement.

Re: Quick question about interest charges

OmarGB9 — Sun, 09 May 2021 14:40:32 GMT

@pip3man wrote:
At what point are interest charges triggered? Is it if the balance is not paid in full by the due date or by the statement closing date. So say I make a minimum payment on the due date and then two days later paid off the entire balance before the statement closing date, will interest still be charged?

By statement closing date. In your example, no, interest would not be charged. Only if you let a balance rollover would that trigger interest to be charged on the remaining unpaid balance.

Re: Quick question about interest charges

Shooting-For-800 — Sun, 09 May 2021 14:59:20 GMT

Depends on previous month also.

Re: Quick question about interest charges

hernaemm90 — Sun, 09 May 2021 15:09:23 GMT

Interest is charged from the date of purchase and interest is waived when paid in full by the due date. At least that's what all of my cards terms and conditions say, so I suspect yours are the same

Re: Quick question about interest charges

Ficoproblems247 — Sun, 09 May 2021 15:36:28 GMT

@hernaemm90 wrote:
Interest is charged from the date of purchase and interest is waived when paid in full by the due date. At least that's what all of my cards terms and conditions say, so I suspect yours are the same

All cards are not the same. There are even examples of the exact same card having different terms for charging interest depending on the cardmember's creditworthiness at the time of application. One customer may have completely different terms involving interest beginning on day one (like you mentioned,) whereas another customer with the exact same credit card may have terms that involve a full traditional grace period. OP will need to look at T&Cs, or provide more info to determine the answer to the question.

Re: Quick question about interest charges

Horseshoez — Sun, 09 May 2021 15:39:01 GMT

@Ficoproblems247 wrote:
@hernaemm90 wrote:
Interest is charged from the date of purchase and interest is waived when paid in full by the due date. At least that's what all of my cards terms and conditions say, so I suspect yours are the same
All cards are not the same. There are even examples of the exact same card having different terms for charging interest depending on the cardmember's creditworthiness at the time of application. One customer may have completely different terms involving interest beginning on day one (like you mentioned,) whereas another customer with the exact same credit card may have terms that involve a full traditional grace period. OP will need to look at T&Cs, or provide more info to determine the answer to the question.

So, that makes two points for reading the Terms and Conditions for each and every card; no two cards are necessarily the same (although they *might* be).

Re: Quick question about interest charges

Ficoproblems247 — Sun, 09 May 2021 15:42:09 GMT

@Horseshoez wrote:
@Ficoproblems247 wrote:
@hernaemm90 wrote:
Interest is charged from the date of purchase and interest is waived when paid in full by the due date. At least that's what all of my cards terms and conditions say, so I suspect yours are the same
All cards are not the same. There are even examples of the exact same card having different terms for charging interest depending on the cardmember's creditworthiness at the time of application. One customer may have completely different terms involving interest beginning on day one (like you mentioned,) whereas another customer with the exact same credit card may have terms that involve a full traditional grace period. OP will need to look at T&Cs, or provide more info to determine the answer to the question.
So, that makes two points for reading the Terms and Conditions for each and every card; no two cards are necessarily the same (although they *might* be).

As I understand it, MOST cards have the same T&Cs for every customer across the board, however SOME have different terms. Since OP did not provide which specific card they are referring to yet, it makes answering the question correctly impossible.

Re: Quick question about interest charges

pip3man — Sun, 09 May 2021 16:44:06 GMT

To provide some more clarity, this is in reference to my Ollo Rewards card. My first statement cut on 04/12 with a minimum payment of $27 due on 05/07. On 05/07 which was the due date, I only paid $100 then two days later I paid off the remaining entire balance of $2400. So I guess my question is will I be charged interest since I didn't pay it off on the due date or would it not matter because I paid it off before the current statement cycle closes.

Re: Quick question about interest charges

Anonymous — Sun, 09 May 2021 16:46:04 GMT

@OmarGB9 wrote:
@pip3man wrote:
At what point are interest charges triggered? Is it if the balance is not paid in full by the due date or by the statement closing date. So say I make a minimum payment on the due date and then two days later paid off the entire balance before the statement closing date, will interest still be charged?
By statement closing date. In your example, no, interest would not be charged. Only if you let a balance rollover would that trigger interest to be charged on the remaining unpaid balance.

I would disagree with this, but maybe that's because we are interpreting the question differently.

So lets say the March 2021 statement has a due date of April 20. From the "two days later", the April 2021 closes on April 22 (with a due date in May). I think (in general) if PIF hasn't happened on April 20, OP will indeed be charged some interest for the March purchases (often using the average daily balance and subtracting any payments that have been made). Then there is the possibility of trailing interest for the two days on the following statement.

And as @Anonymous says, if there wasn't payment in full for the Feb statement, March purchases would be having interest charges applied no matter what you did!

Re: Quick question about interest charges

Ghoshida — Mon, 10 May 2021 15:02:37 GMT

@pip3man wrote:
To provide some more clarity, this is in reference to my Ollo Rewards card. My first statement cut on 04/12 with a minimum payment of $27 due on 05/07. On 05/07 which was the due date, I only paid $100 then two days later I paid off the remaining entire balance of $2400. So I guess my question is will I be charged interest since I didn't pay it off on the due date or would it not matter because I paid it off before the current statement cycle closes.

As others said, it depends on your T&C. But I'll offer general advice.

First off, is there a promo 0% APR offer on your card? If yes, you're fine as long as the 0% APR is valid.

Otherwise, this is what typically happens. All purchases on your April 12 statement started accruing interest from the day you made them - since you borrowed from the lender. You were given a grace period till the due date of the statement, and the accrued interest stays hidden and isn't charged to you if you pay your statement balance in full before the due date. If you make at least the minimum payment, you will not be charged a late fee, or penalty APR. However, if you make only the minimum or above the minimum but not the full statement balance by the due date, the grace period goes off. Then, the lender unhides your accrued interest, adds it to the principal, subtracts the payment made before the due date, and calculates the new balance. This accrues interest till you pay the entire balance off.

But then, as longtimelurker mentioned, the grace period doesn't come back on immediately. Since interest has started accruing and there is some trailing interest when you are paying off the balance that's showing up, it takes another 1-2 statement cycles for the interests to completely go off, and for the grace period to be restored.

This is why, unless you have a promo APR, you should always pay off the full statement balance on or before the due date to avoid any interest. So in your case, it's very likely that you will see interest charged on your next statement. In any case, let us know what you see on the statement.

Re: Quick question about interest charges

Brian_Earl_Spilner — Mon, 10 May 2021 16:27:23 GMT

I don't understand why everyone is making it so confusing.

If there's a grace period, as long as the balance is paid within that period (usually due date), there's no interest charge. If you don't pay the entire balance by end of grace period, you forfeit the next month's grace period. How long you forfeit depends on T&C, but is usually 2 cycles of 0 balance.

Re: Quick question about interest charges

Anonymous — Mon, 10 May 2021 16:09:17 GMT

@Brian_Earl_Spilner wrote:
I don't understand why everyone is making it so confusing.

If there's a grace period, as long as the balance is paid within that period (usually statement cut), there's no interest charge

And I don't understand that statement! Let's say my statement cycle ends on the 1st of the month. Then my January statements cuts on Feb 1, and I will have no interest if I pay by the due date, which is going to be around Feb 20th. Certainly paying by Feb 1 will also avoid interest, but you also have a lot longer. Only due date really matters.

Re: Quick question about interest charges

Brian_Earl_Spilner — Mon, 10 May 2021 16:26:45 GMT

@Anonymous wrote:
@Brian_Earl_Spilner wrote:
I don't understand why everyone is making it so confusing.

If there's a grace period, as long as the balance is paid within that period (usually statement cut), there's no interest charge

And I don't understand that statement! Let's say my statement cycle ends on the 1st of the month. Then my January statements cuts on Feb 1, and I will have no interest if I pay by the due date, which is going to be around Feb 20th. Certainly paying by Feb 1 will also avoid interest, but you also have a lot longer. Only due date really matters.

EDIT: just realized what I typed. You're right. It would be the due date. Will go back and fix.

Re: Quick question about interest charges

jcooks — Mon, 10 May 2021 20:09:27 GMT

Isn't Ollo a starter or rebuilder card? I see in your sig you have almost 200k in CL. Aren't there other cards that would better fit your profile? They are a predatory lender, their terms aren't that great. I'd be surprised if they even offer a grace period. I would put them on the Credit One category of cards.

Re: Quick question about interest charges

pip3man — Tue, 11 May 2021 00:40:15 GMT

@jcooks wrote:
Isn't Ollo a starter or rebuilder card? I see in your sig you have almost 200k in CL. Aren't there other cards that would better fit your profile? They are a predatory lender, their terms aren't that great. I'd be surprised if they even offer a grace period. I would put them on the Credit One category of cards.

No the cards in my sig were pre-BK7. Haven't gotten a chance to update that.