I have a balance on my CSP card of 2600 out of 12k. 1600 of which is due in a few days. I have already made a payment of $200, well over the minimum payment. I have outstanding vendor payments which will be coming in over the next 2-3 weeks. I could dip into my emergency fund and pay the outstanding balance, although I really prefer not to touch that if possible since I have the funds coming in already its just payments were slowed down during holidays. My questions are as follows:
1. Will chase freak out if I carry the balance? (as I mentioned I already made a $200 payment this cycle but I am concerned because I just opened four new accounts in Jan and am worried about how chase may perceive their risk with me)
2. If I do carry the balance for say one cycle am I paying interest on the $1600 or the full $2600?
Again I have access to emergency funds to make the payment if I have to, but I really rather not dig in to that because I have money coming in soon anyway. I will probably pay another $200 or so this cycle to knock the balance down to $1400 before the due date.
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@NRB525 wrote:
@red259 wrote:I have a balance on my CSP card of 2600 out of 12k. 1600 of which is due in a few days. I have already made a payment of $200, well over the minimum payment. I have outstanding vendor payments which will be coming in over the next 2-3 weeks. I could dip into my emergency fund and pay the outstanding balance, although I really prefer not to touch that if possible since I have the funds coming in already its just payments were slowed down during holidays. My questions are as follows:
1. Will chase freak out if I carry the balance? (as I mentioned I already made a $200 payment this cycle but I am concerned because I just opened four new accounts in Jan and am worried about how chase may perceive their risk with me)
2. If I do carry the balance for say one cycle am I paying interest on the $1600 or the full $2600?
Again I have access to emergency funds to make the payment if I have to, but I really rather not dig in to that because I have money coming in soon anyway. I will probably pay another $200 or so this cycle to knock the balance down to $1400 before the due date.
If the $1600 was only just added to this prior statement, then your payment of $200 covers the minimum requirement.
When this next statement cuts, it will see a remaining $1,400 from that first statement, and the interest clock will begin to tick on the entire open balance of $2,600. The interest is calculated on the "daily open balance" so if you pay from that incoming funds, the "daily open balance" begins to decline as you make those payments.
I doubt Chase will do any freaking out if you carry this kind of a balance. You've made the minimum payment. They are in the business of collecting interest from you. The terms of your loan agreement here are to make at least the minimum payment they calculate for you.
I would not worry about it at all, just pay as you've got your cash flow coming in.
If you want to shut off the interest clock, then you need to pay down that $2,600. Either by catching up the payment from the second statement, or what is the same thing, using another card for a while then making sure that $2,600 is paid to zero open amount. Even this is more if you prefer not to carry even that low amount on interest. Chase will have no problem even if you were to charge $1,600 per month and pay that or nearly that each month. Again, they are in the business of earning interest income.
Sorry just a bit confused. If I want to stop the interest from running once the second statement cuts would I just need to pay $1600 or I gotta pay $2600 to stop the interest?
@NRB525 wrote:
If the $1600 was only just added to this prior statement, then your payment of $200 covers the minimum requirement.
When this next statement cuts, it will see a remaining $1,400 from that first statement, and the interest clock will begin to tick on the entire open balance of $2,600. The interest is calculated on the "daily open balance" so if you pay from that incoming funds, the "daily open balance" begins to decline as you make those payments.
I doubt Chase will do any freaking out if you carry this kind of a balance. You've made the minimum payment. They are in the business of collecting interest from you. The terms of your loan agreement here are to make at least the minimum payment they calculate for you.
I would not worry about it at all, just pay as you've got your cash flow coming in.
If you want to shut off the interest clock, then you need to pay down that $2,600. Either by catching up the payment from the second statement, or what is the same thing, using another card for a while then making sure that $2,600 is paid to zero open amount. Even this is more if you prefer not to carry even that low amount on interest. Chase will have no problem even if you were to charge $1,600 per month and pay that or nearly that each month. Again, they are in the business of earning interest income.
Anytime you consider carrying a balance past due date, it is useful to understand exactly what that does to the interest charged on your account. It isn't just the matter of the APR times the unpaid due balance. You also loose the grace period on all new charges until you have once again posted a 0 account balance on a monthly due date. That is why the effective cost of carrying a small balance over on an account that is normally PIF is so high. The card company is going to charge you interest on everything owed on the card from the day each dollar first posts. Depending on your spending pattern, the effective cost of carrying a small balance can be many times the posted APR. The grace period is a perk of nearly all cards that seldom gets mentioned, but can be very costly to give away by not PIF.
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@bada_bing wrote:
@NRB525 wrote:
If the $1600 was only just added to this prior statement, then your payment of $200 covers the minimum requirement.
When this next statement cuts, it will see a remaining $1,400 from that first statement, and the interest clock will begin to tick on the entire open balance of $2,600. The interest is calculated on the "daily open balance" so if you pay from that incoming funds, the "daily open balance" begins to decline as you make those payments.
I doubt Chase will do any freaking out if you carry this kind of a balance. You've made the minimum payment. They are in the business of collecting interest from you. The terms of your loan agreement here are to make at least the minimum payment they calculate for you.
I would not worry about it at all, just pay as you've got your cash flow coming in.
If you want to shut off the interest clock, then you need to pay down that $2,600. Either by catching up the payment from the second statement, or what is the same thing, using another card for a while then making sure that $2,600 is paid to zero open amount. Even this is more if you prefer not to carry even that low amount on interest. Chase will have no problem even if you were to charge $1,600 per month and pay that or nearly that each month. Again, they are in the business of earning interest income.
Anytime you consider carrying a balance past due date, it is useful to understand exactly what that does to the interest charged on your account. It isn't just the matter of the APR times the unpaid due balance. You also loose the grace period on all new charges until you have once again posted a 0 account balance on a monthly due date. That is why the effective cost of carrying a small balance over on an account that is normally PIF is so high. The card company is going to charge you interest on everything owed on the card from the day each dollar first posts. Depending on your spending pattern, the effective cost of carrying a small balance can be many times the posted APR. The grace period is a perk of nearly all cards that seldom gets mentioned, but can be very costly to give away by not PIF.
Just curious lets use the following example with simple numbers:
I have $200 due on 1/7.
I have $100 of new charges which is on the second statement
So now I am paying intrest on $300 after the second statement cuts
Now in the above scenario say that after the second statement cuts I place another $50 charge on the card (the statement cycle for this charge has not cut yet).
Am I now paying interest on $300 or $350?
If I pay $300 does this stop the interest or I need to pay $350 to stop the interest?
@NRB525 wrote:You have to pay down that $2,600, catch up your PIF cycle by paying in full.
Once you pass this first statement due date not paying the first statement in full, then the interest clock begins on all open charges. It's not a multiple, it's still only the APR at a daily rate applied to the open balance, but it does start adding the interest until you catch it up.
What is your APR on this card?
I will have to check although the APR is not good that is for sure since its a rewards card. In another week or so I would have the first cycles payment. Sadly it seems by doing this I would be hit with a ton of interest because then I would lost the grace period on the second statement amount and now would have to come up with $2600 instead of the $1600. It looks like I will need to dig into my emergency fund as much as I hate doing so, especially since the money is coming in but is just not coming in fast enough.
Let's say the APR is 20% (I'm just making up an APR I forget what mine is). How much interest would that be if I carried $2600 for 30 days?
@red259 wrote:
@NRB525 wrote:You have to pay down that $2,600, catch up your PIF cycle by paying in full.
Once you pass this first statement due date not paying the first statement in full, then the interest clock begins on all open charges. It's not a multiple, it's still only the APR at a daily rate applied to the open balance, but it does start adding the interest until you catch it up.
What is your APR on this card?
I will have to check although the APR is not good that is for sure since its a rewards card. In another week or so I would have the first cycles payment. Sadly it seems by doing this I would be hit with a ton of interest because then I would lost the grace period on the second statement amount and now would have to come up with $2600 instead of the $1600. It looks like I will need to dig into my emergency fund as much as I hate doing so, especially since the money is coming in but is just not coming in fast enough.
Let's say the APR is 20% (I'm just making up an APR I forget what mine is). How much interest would that be if I carried $2600 for 30 days?
I attempted to do the math on my above hypothetical $2600 on a card with 20% APR for 30 days and I came out with interest of around $42. Does that sound right?