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Credit card question

brbmake
Established Member

Credit card question

So, we have 4 credit cards. 3 with Cap 1, the other with USAA.  We just paid off all 3 of the cap 1's last month as their "payment".  Totally paid off.  Well, 2 of the 3 have monthly charges on them.  Membership fees.  One of them is $25 and the other is $55.  I get on to pay them early (they are not due for about 2 more weeks) and both of them have interest added to them.  But way more interest than I think there should be.  The one that has a $25 charge has almost $17 in interest on it.  The one with the $55 charge has $37 in interest on it! Mind you, these have never been late a day. Ever. Perfect payment.  I thought when they were paid off that any interest would be reflective of the amount that was charged on them and not what the amount USED to be.  I then looked at the other cap 1 that has had no charges on it since it was paid off and we owe $6 in interest.  WTH? Thoughts?

Message 1 of 5
4 REPLIES 4
oldman87
Valued Contributor

Re: Credit card question


@brbmake wrote:

So, we have 4 credit cards. 3 with Cap 1, the other with USAA.  We just paid off all 3 of the cap 1's last month as their "payment".  Totally paid off.  Well, 2 of the 3 have monthly charges on them.  Membership fees.  One of them is $25 and the other is $55.  I get on to pay them early (they are not due for about 2 more weeks) and both of them have interest added to them.  But way more interest than I think there should be.  The one that has a $25 charge has almost $17 in interest on it.  The one with the $55 charge has $37 in interest on it! Mind you, these have never been late a day. Ever. Perfect payment.  I thought when they were paid off that any interest would be reflective of the amount that was charged on them and not what the amount USED to be.  I then looked at the other cap 1 that has had no charges on it since it was paid off and we owe $6 in interest.  WTH? Thoughts?


It's called residual interest, or trialing interest. Interest on the balance you paid off for that cycle before you paid off, typically does not post until the next cycle. For example, if you were to pay off the monthly fee and residual interest today, you still owe residual interest on that amount from the new statement date to today, which will show up on the next statement along with next month's fee.

 

Best thing to do is to call and ask for the pay off amount that includes the residual interest, then PIF on the same day. Don't forget to ask them to reset your grace period, usually done by reporting $0 balance on a new statement but more complicated with a monthly fee that is impossible to report $0.

Message 2 of 5
brbmake
Established Member

Re: Credit card question

Is there a way to stop that? Like to essentially pay no interest?

 

Message 3 of 5
oldman87
Valued Contributor

Re: Credit card question


@brbmake wrote:

Is there a way to stop that? Like to essentially pay no interest?

 


Sorry, I was editing the previous post with the solution when you posted this, basically you need to reset your grace period, a privilege you lose every time you "carried" a balance.

 

"Best thing to do is to call and ask for the pay off amount that includes the residual interest, then PIF on the same day. Don't forget to ask them to reset your grace period, usually done by reporting $0 balance on a new statement but more complicated with a monthly fee that is impossible to report $0"

Message 4 of 5
UpperNwGuy
Valued Contributor

Re: Credit card question


@brbmake wrote:

Is there a way to stop that? Like to essentially pay no interest?

 


Yes, pay the card balance down to zero for two months in a row, and never carry a balance again.

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