topic Re: No grace period on Discover? That's news to me. in Credit Cards

No grace period on Discover? That's news to me.

lithium78 — Wed, 15 Aug 2012 13:31:47 GMT

I was trying to figure out why Discover charged me interest this month when everything was paid off in full and the CSR informed me that Discover doesn't have a grace period, so if you don't immediately pay off your card when you make purchases, they charge daily residuals. Hmm. I learn something new every day.

Re: No grace period on Discover? That's news to me.

Anonymous — Wed, 15 Aug 2012 13:44:52 GMT

Hmmm are you sure? did you have a balance the previous month?

Re: No grace period on Discover? That's news to me.

Anonymous — Wed, 15 Aug 2012 14:00:19 GMT

Paying Interest: We begin to impose interest charges on a transaction, fee or interest charge from the day we add it to the daily balance. We continue to impose interest charges until you pay the total amount you owe us. You can avoid paying interest on Purchases as described below. However, you cannot avoid paying interest on Balance Transfers or Cash Advances.

How to Avoid Paying Interest on Purchases ("Grace Period")
If you paid the New Balance on your previous billing statement by the Payment Due Date shown on that billing statement, we will not impose interest charges on new Purchases, or any portion of a new Purchase, paid by the Payment Due Date on your current billing statement. New Purchases are Purchases that first appear on the current billing statement.

How We Apply Payments May Impact Your Grace Period
If you do not pay your New Balance in full each month, then, depending on the balance to which we apply your payment, you may not get a grace period on new Purchases.

How We Calculate Interest Charges - Daily Balance Method (including current transactions): We calculate interest charges each billing period by first figuring the "daily balance" for each Transaction Category. Transaction Categories include standard Purchases, standard Cash Advances and different promotional balances, such as Balance Transfers.

How We Figure the Daily Balance for Each Transaction Category

We start with the beginning balance for each day. The beginning balance for the first day of the billing period is your balance on the last day of your previous billing period.
We add any interest charges accrued on the previous day's daily balance and any new transactions and fees. We add any new transactions or fees as of the later of the Transaction Date or the first day of the billing period in which the transaction or fee posted to your Account.
We subtract any new credits and payments.
We make other adjustments (including those adjustments required in the "Paying Interest" section).

How We Figure Your Total Interest Charges

We multiply the daily balance for each Transaction Category by its daily periodic rate. We do this for each day in the billing period. This gives us the interest charges for each Transaction Category. To get a daily periodic rate, we divide the APR that applies to the Transaction Category by 365.
We add up all the daily interest charges. The sum is the total interest charge for the billing period.

How We Include Fees
We add Balance Transfer Fees to the applicable Balance Transfer Transaction Category. We add Cash Advance Fees to the applicable Cash Advance Transaction Category. We add all other fees to the standard Purchase Transaction Category.

Balance Subject to Interest Rate. Your statement shows a Balance Subject to Interest Rate. It shows this for each transaction category. The Balance Subject to Interest Rate is the average of the daily balances during the billing period.

Re: No grace period on Discover? That's news to me.

lithium78 — Wed, 15 Aug 2012 14:02:47 GMT

Two months ago, I was hit with a $2.00 minimum interest charge, because I made a mistake and made a Cinnabon purchase on the statement date. D'oh! This past month I paid everything off before the statement date except for the amount that I balance transferred at 0% from another card and they charged me interest on a weird amount that had nothing to do with the balance transfer amount. I called them to figure out what was going on and that's when they told me that there is no grace period and that the interest came from an amount that I left on the card for a couple of weeks instead of paying immediately.

Re: No grace period on Discover? That's news to me.

Anonymous — Wed, 15 Aug 2012 14:06:15 GMT

On Discover, if you're not entirely paying your balance in full, you get charged interest. Even if you're carrying a 0% balance transfer month-to-month and paying your new purchases in full, there is no grace period for those new purchases and you get charged interest.

Re: No grace period on Discover? That's news to me.

lithium78 — Wed, 15 Aug 2012 14:07:55 GMT

@Anonymous wrote:
Paying Interest: We begin to impose interest charges on a transaction, fee or interest charge from the day we add it to the daily balance. We continue to impose interest charges until you pay the total amount you owe us. You can avoid paying interest on Purchases as described below. However, you cannot avoid paying interest on Balance Transfers or Cash Advances.

How to Avoid Paying Interest on Purchases ("Grace Period")
If you paid the New Balance on your previous billing statement by the Payment Due Date shown on that billing statement, we will not impose interest charges on new Purchases, or any portion of a new Purchase, paid by the Payment Due Date on your current billing statement. New Purchases are Purchases that first appear on the current billing statement.

How We Apply Payments May Impact Your Grace Period
If you do not pay your New Balance in full each month, then, depending on the balance to which we apply your payment, you may not get a grace period on new Purchases.

How We Calculate Interest Charges - Daily Balance Method (including current transactions): We calculate interest charges each billing period by first figuring the "daily balance" for each Transaction Category. Transaction Categories include standard Purchases, standard Cash Advances and different promotional balances, such as Balance Transfers.

How We Figure the Daily Balance for Each Transaction Category
We start with the beginning balance for each day. The beginning balance for the first day of the billing period is your balance on the last day of your previous billing period.
We add any interest charges accrued on the previous day's daily balance and any new transactions and fees. We add any new transactions or fees as of the later of the Transaction Date or the first day of the billing period in which the transaction or fee posted to your Account.
We subtract any new credits and payments.
We make other adjustments (including those adjustments required in the "Paying Interest" section).

How We Figure Your Total Interest Charges
We multiply the daily balance for each Transaction Category by its daily periodic rate. We do this for each day in the billing period. This gives us the interest charges for each Transaction Category. To get a daily periodic rate, we divide the APR that applies to the Transaction Category by 365.
We add up all the daily interest charges. The sum is the total interest charge for the billing period.

How We Include Fees
We add Balance Transfer Fees to the applicable Balance Transfer Transaction Category. We add Cash Advance Fees to the applicable Cash Advance Transaction Category. We add all other fees to the standard Purchase Transaction Category.

Balance Subject to Interest Rate. Your statement shows a Balance Subject to Interest Rate. It shows this for each transaction category. The Balance Subject to Interest Rate is the average of the daily balances during the billing period.

So, basically, I no longer have a grace period because I have a balance transfer amount, since that leaves an amount unpaid for a "New Balance". Am I reading that right?

Re: No grace period on Discover? That's news to me.

Anonymous — Wed, 15 Aug 2012 14:12:59 GMT

That's exactly right.

Re: No grace period on Discover? That's news to me.

lithium78 — Wed, 15 Aug 2012 15:15:28 GMT

Wow. I guess I'll just pay off the entire amount then. What a ridiculous balance transfer policy.

Re: No grace period on Discover? That's news to me.

trumpet-205 — Wed, 15 Aug 2012 15:21:03 GMT

You simply need to pay more. This is how all credit card works.

* Minimum payment amount applies to balance with lowest APR. In your case it is BT.

* Any amount over minimum payment applies to balance with highest APR. In your case it is purchases.

So you need to pay purchase amount + minimum payment + $10 (torward daily interest accured by purchase).

@lithium78 wrote:
Wow. I guess I'll just pay off the entire amount then. What a ridiculous balance transfer policy.

You should consider yourselve lucky, as pre-2009 (before CARD Act), all payment is applied to balance with lowest APR. Meaning if you use your CC to do BT, you cannot use it on purchase, or you will get charged on interest for sure.

Re: No grace period on Discover? That's news to me.

lithium78 — Wed, 15 Aug 2012 15:39:58 GMT

@trumpet-205 wrote:

You should consider yourselve lucky, as pre-2009 (before CARD Act), all payment is applied to balance with lowest APR. Meaning if you use your CC to do BT, you cannot use it on purchase, or you will get charged on interest for sure.

I'm used to BoA, which allows you to make a balance transfer and doesn't play the games that Discover apparently plays. Discover has agreed to refund the interest they charged and I'll pay off the BT and consider it an expensive lesson not to do that kind of business with Discover.

As far as I'm concerned, a credit card gets paid a BT fee and that is all they should be receive as compensation for that service. Discover has just made me less likely to do heavy business with them, because they want to trick me into paying them extra. I don't pay interest on credit cards; They pay me for generating swipe fees for them.

Re: No grace period on Discover? That's news to me.

score_building — Wed, 15 Aug 2012 15:41:59 GMT

@lithium78 wrote:
@Anonymous wrote:
Paying Interest: We begin to impose interest charges on a transaction, fee or interest charge from the day we add it to the daily balance. We continue to impose interest charges until you pay the total amount you owe us. You can avoid paying interest on Purchases as described below. However, you cannot avoid paying interest on Balance Transfers or Cash Advances.

How to Avoid Paying Interest on Purchases ("Grace Period")
If you paid the New Balance on your previous billing statement by the Payment Due Date shown on that billing statement, we will not impose interest charges on new Purchases, or any portion of a new Purchase, paid by the Payment Due Date on your current billing statement. New Purchases are Purchases that first appear on the current billing statement.

How We Apply Payments May Impact Your Grace Period
If you do not pay your New Balance in full each month, then, depending on the balance to which we apply your payment, you may not get a grace period on new Purchases.

How We Calculate Interest Charges - Daily Balance Method (including current transactions): We calculate interest charges each billing period by first figuring the "daily balance" for each Transaction Category. Transaction Categories include standard Purchases, standard Cash Advances and different promotional balances, such as Balance Transfers.

How We Figure the Daily Balance for Each Transaction Category
We start with the beginning balance for each day. The beginning balance for the first day of the billing period is your balance on the last day of your previous billing period.
We add any interest charges accrued on the previous day's daily balance and any new transactions and fees. We add any new transactions or fees as of the later of the Transaction Date or the first day of the billing period in which the transaction or fee posted to your Account.
We subtract any new credits and payments.
We make other adjustments (including those adjustments required in the "Paying Interest" section).

How We Figure Your Total Interest Charges
We multiply the daily balance for each Transaction Category by its daily periodic rate. We do this for each day in the billing period. This gives us the interest charges for each Transaction Category. To get a daily periodic rate, we divide the APR that applies to the Transaction Category by 365.
We add up all the daily interest charges. The sum is the total interest charge for the billing period.

How We Include Fees
We add Balance Transfer Fees to the applicable Balance Transfer Transaction Category. We add Cash Advance Fees to the applicable Cash Advance Transaction Category. We add all other fees to the standard Purchase Transaction Category.

Balance Subject to Interest Rate. Your statement shows a Balance Subject to Interest Rate. It shows this for each transaction category. The Balance Subject to Interest Rate is the average of the daily balances during the billing period.
So, basically, I no longer have a grace period because I have a balance transfer amount, since that leaves an amount unpaid for a "New Balance". Am I reading that right?

Correct. This is why they love it when a card holder makes ANY purchases while carrying a BT. To avoid interest on new purchases a card holder must use a different (PIF) cc.

Re: No grace period on Discover? That's news to me.

trumpet-205 — Wed, 15 Aug 2012 15:48:25 GMT

Again, this is not Discover problem or Discover game. All CC now does this. CARD Act defines what payment goes to where.

@score_building

* Minimum payment amount applies to balance with lowest APR. In your case it is BT.

* Any amount over minimum payment applies to balance with highest APR. In your case it is purchases.

So you need to pay purchase amount + minimum payment + $10 (torward daily interest accured by purchase).

Re: No grace period on Discover? That's news to me.

Anonymous — Wed, 15 Aug 2012 16:38:04 GMT

Chase, on the other hand, told me that it is possible to continue to use my Freedom card for purchases while carrying a 0% balance transfer without paying additional interest, as long as I pay the minimum payment + the total amount of all new purchases every month.

EDIT: Just got off the phone with Chase again and they said this is not the case unless you have explicitly set up Blueprint. I went ahead and set up Blueprint Full Pay for all purchase categories, and I'm going to call them again later and see if the purchases I already made this month can be included. There is a sample Blueprint statement that shows how it works.

Re: No grace period on Discover? That's news to me.

score_building — Wed, 15 Aug 2012 16:59:52 GMT

@trumpet-205 wrote:
Again, this is not Discover problem or Discover game. All CC now does this. CARD Act defines what payment goes to where.

@score_building

* Minimum payment amount applies to balance with lowest APR. In your case it is BT.
* Any amount over minimum payment applies to balance with highest APR. In your case it is purchases.

So you need to pay purchase amount + minimum payment + $10 (toward daily interest accrued by purchase).

RIght so one cannot avoid paying some interest on new purchases (when a BT balance exists) since new purchases begin to accrue interest immediately at check out.

Re: No grace period on Discover? That's news to me.

Anonymous — Wed, 15 Aug 2012 20:08:45 GMT

I just called Chase again. This time, since I was given conflicting information on my previous calls, I was transferred to a senior accounts specialist who told me that the earlier representative was correct -- as long as the minimum payment + the amount of all new purchases was paid, no new interest would be charged, regardless of enrollment in Blueprint. He said this is due to anything over the minimum payment automatically applying to the highest APR charges first. He also said he would be contacting the rep who took the earlier card to correct them.

I'd like to keep you guys posted on the outcome of this once I get my next statement. I apologize to the OP for threadjacking, but if this information is correct, it may sway more people to carry balance transfers on their Chase cards than their Discover cards. I had the choice of similar offers on either card, and I'm sure many of us have had the same offers.

Re: No grace period on Discover? That's news to me.

tboy1977 — Wed, 15 Aug 2012 20:46:42 GMT

WHY I LOVE Navy Federal. I had a balance on my account last month (in fact I made no payment oops, but I normally pay in full) Anyway, I PIF and my statement shows NO INTEREST. Nada! Zero% YEAY!!! Last month I paid 9 bucks on 850.00 balance but nothing this month. Another reason to go Navy Fed

Re: No grace period on Discover? That's news to me.

LS2982 — Wed, 15 Aug 2012 21:09:45 GMT

@tboy did you have a BT on that NFCU card plus regular charges?

Re: No grace period on Discover? That's news to me.

tboy1977 — Thu, 16 Aug 2012 03:31:48 GMT

Not a balance transfer, but definitely the card was maxxed out. I paid interest last month, but PIF and no interest this month. I PIF two days before statement,

Re: No grace period on Discover? That's news to me.

Anonymous — Sun, 19 Aug 2012 22:09:59 GMT

The senior chase rep was correct about the agent being correct Only exception to that rule is the Disney card but that's another can.