topic Re: Statement dates, due dates, and finance charges. How does it work? in Credit Cards

Statement dates, due dates, and finance charges. How does it work?

ngerasimatos — Thu, 27 May 2010 19:41:27 GMT

I am very confused about statement dates, due dates, and finance charges. If I buy something, lets say on the 5th of a month, when does that purchase amount start to accrue interest? Here is my situation: example below.

PURCHASE A $400 - COMPLETED MAY 5TH

PURCHASE B $100 - COMPLETED MAY 11TH

PURCHASE C $25 - COMPLETED MAY 14TH

PAYMENT $500 - COMPLETED MAY 21ST

PAYMENT DUE DATE - MAY 25TH

Re: Statement dates, due dates, and finance charges. How does it work?

Anonymous — Thu, 27 May 2010 20:46:33 GMT

This is a confusing topic.

Are you assuming a grace period?

Re: Statement dates, due dates, and finance charges. How does it work?

ngerasimatos — Thu, 27 May 2010 20:48:41 GMT

Yes, grace period on interest and also when does the balance report to the CRA.

If I make a purchase 2 days before the CL is to report to a CRA, will that reflect?

Re: Statement dates, due dates, and finance charges. How does it work?

Anonymous — Thu, 27 May 2010 21:28:31 GMT

Here is example to avoid any interest charges.assuming you have 25 grace period.

Statement Closes Balance = $0 April 30th

PURCHASE A $400 - COMPLETED MAY 5TH

PURCHASE B $100 - COMPLETED MAY 11TH

PURCHASE C $25 - COMPLETED MAY 14TH

PAYMENT DUE DATE - MAY 25TH --- Due $0, Pay nothing

Statement Closes - Balance = $525 - May 31

PAYMENT DUE DATE - June 25TH --- PIF $525

No interest accrues in this example. If you pay less than $525 total by June 25, you will be charged interest.

Re: Statement dates, due dates, and finance charges. How does it work?

Anonymous — Thu, 27 May 2010 22:08:45 GMT

@ngerasimatos wrote:
I am very confused about statement dates, due dates, and finance charges. If I buy something, lets say on the 5th of a month, when does that purchase amount start to accrue interest? Here is my situation: example below.

PURCHASE A $400 - COMPLETED MAY 5TH
PURCHASE B $100 - COMPLETED MAY 11TH
PURCHASE C $25 - COMPLETED MAY 14TH

PAYMENT $500 - COMPLETED MAY 21ST

PAYMENT DUE DATE - MAY 25TH

Using the dates in the example, I've got to figure that the statement closing date for that account is around the 1st of the month. Your statement should indicate exactly when it is. I'll assume it is May 1st for this example.

If you had a zero balance on May 1, and you had paid your previous balance in full on or before its April 25th due date, no payment would be due by May 25th. Whatever payments and charges you make between May 1st and June 1st will appear on your June 1st statement, and at least the minimum payment will be due on June 25th.

If the balance is NOT paid by June 25th, charges accrue interest from the day it was first posted to your account. The interest is added to your account's current balance on July 1st (when the next statement closes).

If any statement's balance is not paid in full by the due date, you will be charged interest, as well as interest on all future purchases, right from the time charges first post, until you once again have paid your statement balance in full by the due date.

In your example, and assuming the zero starting balance, with all of the charges occurring in the May 1 - June 1 cycle, your payment of $500 will leave a $25 balance (which is what will be reported to the CRA when the statement actually closes on June 1st), plus/minus any additional charges/payments you make on or before June 1st.

If you pay that statement balance in full by June 25th, you avoid paying any interest, not only for anything on that bill, but you retain the grace period for purchases in the June 1 - July 1 billing cycle.

Whew! Clear as mud, right?

P.S. To confuse you further, when you do finally pay a statement in full after having carried a balance on previous statements, it usually takes two statements to totally clear off any interest. The cccs will continue to charge interest on your balance from the moment they issue the statement to the moment you actually pay it in full, but they won't tack on that additional interest until the end of the following month's cycle.

WARNING: iF YOU HAD BEEN CARRYING A BALANCE, BUT YOU PAID IT IN FULL BY THE DUE DATE THIS MONTH, DON'T ASSUME YOU NOW OWE NOTHING!! You will owe interest (as stated above) which will not appear until the new statement cuts. The credit card companies get people with this one all the time. DO NOT BE ONE OF THOSE PEOPLE.

P.P.S. You know, this is confusing. It took me six edits (at least) to get this right, and I'm still not sure I've got it down correctly!

Re: Statement dates, due dates, and finance charges. How does it work?

Anonymous — Thu, 27 May 2010 22:20:58 GMT

@Anonymous wrote:

@ngerasimatos wrote:
I am very confused about statement dates, due dates, and finance charges. If I buy something, lets say on the 5th of a month, when does that purchase amount start to accrue interest? Here is my situation: example below.

PURCHASE A $400 - COMPLETED MAY 5TH
PURCHASE B $100 - COMPLETED MAY 11TH
PURCHASE C $25 - COMPLETED MAY 14TH

PAYMENT $500 - COMPLETED MAY 21ST

PAYMENT DUE DATE - MAY 25TH

Using the dates in the example, I've got to figure that the statement closing date for that account is around the 1st of the month. Your statement should indicate exactly when it is. I'll assume it is May 1st for this example.

If you had a zero balance on May 1, and you had paid your previous balance in full on or before its April 25th due date, no payment would be due by May 25th. Whatever payments and charges you make between May 1st and June 1st will appear on your June 1st statement, and at least the minimum payment will be due on June 25th.

If the balance is NOT paid by June 25th, charges accrue interest from the day it was first posted to your account. The interest is added to your account's current balance on July 1st (when the next statement closes).

If any statement's balance is not paid in full by the due date, you will be charged interest, as well as interest on all future purchases, right from the time charges first post, until you once again have paid your statement balance in full by the due date.

In your example, and assuming the zero starting balance, with all of the charges occurring in the May 1 - June 1 cycle, your payment of $500 will leave a $25 balance (which is what will be reported to the CRA when the statement actually closes on June 1st), plus/minus any additional charges/payments you make on or before June 1st.

If you pay that statement balance in full by June 25th, you avoid paying any interest, not only for anything on that bill, but you retain the grace period for purchases in the June 1 - July 1 billing cycle.

Whew! Clear as mud, right?

P.S. To confuse you further, when you do finally pay a statement in full after having carried a balance on previous statements, it usually takes two statements to totally clear off any interest. The cccs will continue to charge interest on your balance from the moment they issue the statement to the moment you actually pay it in full, but they won't tack on that additional interest until the end of the following month's cycle.

WARNING: iF YOU HAD BEEN CARRYING A BALANCE, BUT YOU PAID IT IN FULL BY THE DUE DATE THIS MONTH, DON'T ASSUME YOU NOW OWE NOTHING!! You will owe interest (as stated above) which will not appear until the new statement cuts. The credit card companies get people with this one all the time. DO NOT BE ONE OF THOSE PEOPLE.

P.P.S. You know, this is confusing. It took me six edits (at least) to get this right, and I'm still not sure I've got it down correctly!

If you let interest start accrueing, you have to read the Terms and Conditions carefully to know exactly how it starts and ends the interest accruals. They are not all the same.

But once you start accrueing interest, every purchase starts accrueing interest from the post date.

I hope that helps

Re: Statement dates, due dates, and finance charges. How does it work?

Anonymous — Thu, 27 May 2010 22:31:25 GMT

@Anonymous wrote:
If you let interest start accrueing, you have to read the Terms and Conditions carefully to know exactly how it starts and ends the interest accruals. They are not all the same.

But once you start accrueing interest, every purchase starts accrueing interest from the post date.

I hope that helps

Thank you, Wolf3!! (I've already given myself a headache trying to get through this one reply, and was afraid there'd be questions about two-cycle billing!)

Re: Statement dates, due dates, and finance charges. How does it work?

ngerasimatos — Thu, 27 May 2010 22:44:33 GMT

Sigh. I guess I am trying to figure out the following.

How long do I have from the date I make a purchase before it starts to accrue interest, and also how can I time my payments so that I dont reflect a high balance. I use this card constantly every month for gas/food/etc to gain rewards and then PIF every month. It just seem though I am always getting dinged with interest and I dont understand how. I PIF every month on or before the due date.

Re: Statement dates, due dates, and finance charges. How does it work?

Anonymous — Thu, 27 May 2010 22:46:28 GMT

I think 2 cycle billing is banned by the new law. It was a practivce designed to make your interest charges less than normal if your balance was going up and more than normal if you balance was decreasing.

Re: Statement dates, due dates, and finance charges. How does it work?

Anonymous — Thu, 27 May 2010 22:51:44 GMT

@ngerasimatos wrote:
Sigh. I guess I am trying to figure out the following.

How long do I have from the date I make a purchase before it starts to accrue interest, and also how can I time my payments so that I dont reflect a high balance. I use this card constantly every month for gas/food/etc to gain rewards and then PIF every month. It just seem though I am always getting dinged with interest and I dont understand how. I PIF every month on or before the due date.

What card is this? If you are PIF by due date every month, you should not be paying interest. Tell us more.

Timing your payments for credit report is completely seperate matter, I would just like to understand why you are charged interest.

Re: Statement dates, due dates, and finance charges. How does it work?

Anonymous — Fri, 28 May 2010 11:09:49 GMT

Hmmm....are there any cards out there that don't have a grace period for purchases, no matter what? Not being a wiseguy here. I'm really wondering if such an animal exists.

Re: Statement dates, due dates, and finance charges. How does it work?

Anonymous — Fri, 28 May 2010 16:07:43 GMT

@Anonymous wrote:
Hmmm....are there any cards out there that don't have a grace period for purchases, no matter what? Not being a wiseguy here. I'm really wondering if such an animal exists.

There are numerous subprime cards out there with no grace period. It makes the card extremely expensive to use.

Go look and T&C for Banks like New Millenium, Credit One, First Premier, Applied Bank and you will find quite a few.

Re: Statement dates, due dates, and finance charges. How does it work?

Anonymous — Fri, 28 May 2010 16:31:11 GMT

@Anonymous wrote:

@Anonymous wrote:
Hmmm....are there any cards out there that don't have a grace period for purchases, no matter what? Not being a wiseguy here. I'm really wondering if such an animal exists.

There are numerous subprime cards out there with no grace period. It makes the card extremely expensive to use.

Go look and T&C for Banks like New Millenium, Credit One, First Premier, Applied Bank and you will find quite a few.

Holy Cow! I did, and I did.

With all the time I've spent on this site, I never knew this about these cards before today...

Re: Statement dates, due dates, and finance charges. How does it work?

Anonymous — Fri, 28 May 2010 17:21:29 GMT

@Anonymous wrote:

@Anonymous wrote:

@Anonymous wrote:
Hmmm....are there any cards out there that don't have a grace period for purchases, no matter what? Not being a wiseguy here. I'm really wondering if such an animal exists.

There are numerous subprime cards out there with no grace period. It makes the card extremely expensive to use.

Go look and T&C for Banks like New Millenium, Credit One, First Premier, Applied Bank and you will find quite a few.

Holy Cow! I did, and I did.

With all the time I've spent on this site, I never knew this about these cards before today...

I generally recommend that people get rid of these things as soon as practical.

There is a CU that offers a secured card with no grace period but it has no annual fee and it pays interest on deposit. It would be a good sock drawer card, to never use and show a $0 balance. I doubt a CU would cancel a secured card for non use. That is the only case where I would consider a no grace period card.