Dumb Payment Question

[Beckhsrules]

Like I have said in a previous thread a week back the below is my current scenario and my question is pretty dumb. Please advise me on what will happen to my interest charges in the next statement.

My last statement cut off date was 2/13. Balance was 2500.

Balance due date was 3/10. I paid of 2000 and the balance was 500.

Now the statement cut off on 3/13 and I had some new charges too on the card. With the addition of interest the total outstanding balance is 1400.

I got my paycheck now and have money to pay off the whole of 1400. I know i have to pay off the 500 as soon as possible to stop accuring interest. My question is do i have to pay just the 500 or the whole of 1400 immediately to stop collecting interest. or do i have the liberty of paying the rest 900(1400-500 paying today) until my next due date which will be 4/10 without accuring any interest on the 900 amount which was charged in the cycle of 2/13-3/13.

[Anonymous]

Ok YMMV but foir the most part...

it seems as if the % on the $500 would have been added as of 3/10

and since

a) There was an outstanding balance AND

b) new charges added to an account with a balance

most lenders will calculate % on new purchases as well as the old balance.

It is NOT a 'dumb question' by any means....

Some vendors will charge % if you have NOT had a 'clean' or zero balance for 2 full statements ( ala Cap-1)

Where others aren't so fickle and acrue % more favorably but the only way to be (mostly) sure is to evaluate

your CC disclosure and ask them directly EXACTLY how 'they' calculate %....avg daily balance and how the avg daily balance

is calculated.

This can be complicated by special BT rates on some balances, intro rates on others,etc

[Anonymous]

Since you left an unpaid balance, most lenders will charge interest on new purchases too (you should check your cardholder's agreement), meaning you would accrue interest on the whole $1400 plus whatever you put on your card until your next statement. Actually as the previous poster already mentioned, you might be charged interest even in following billing cycles as well, if you wait to pay off the card just before the new due date. That's why you should pay off your bill within your grace period, because if not, you might not even be able to tell what your bank is charging you.

[lg8302ch]

It really gets complicated once you are in the interest period and I guess you would need to look at the terms of your card. What I would do is pay the 1400$ asap and not use the card anymore until the next 0 balance statement. Do you have other cards that you could use in the meantime?

[noobody]

Assume your interest rate is 24%, one month interest on $1400 is $28, I would pay current TOTAL balance showing on line PLUS $30, make no new charge until next statement cut, thus it will show a negative balance and restore the grace period.

Make sure to payoff the whole amount due from now on to avoid future financial charge.

[lg8302ch]

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@noobody wrote:

Assume your interest rate is 24%, one month interest on $1400 is $28, I would pay current TOTAL balance showing on line PLUS $30, make no new charge until next statement cut, thus it will show a negative balance and restore the grace period.

Make sure to payoff the whole amount due from now on to avoid future financial charge.

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^this^ forgot to mention on my post above to calculate your interest (round up) and add the amount  to your 1400$ to make sure your next statement cuts 0 balance and restores grace period.

[takeshi74]

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@Beckhsrules wrote:

I got my paycheck now and have money to pay off the whole of 1400. I know i have to pay off the 500 as soon as possible to stop accuring interest. My question is do i have to pay just the 500 or the whole of 1400 immediately to stop collecting interest. or do i have the liberty of paying the rest 900(1400-500 paying today) until my next due date which will be 4/10 without accuring any interest on the 900 amount which was charged in the cycle of 2/13-3/13.

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Definitely not a dumb question.  A lot of people don't understand this and I'm not even sure that my understanding is 100%.

Typically when you carry a balance you lose your grace period on new purchases.  You'd have to check your terms to confirm but this seems fairly standard for most cards.  In other words, yes, you're accruing interest on the remaning $500 but the entire $1,400 is accruing interest.  Given the way that interest is calculated, even if you paid $1,400 right now there would probably still be residual interest that you'd have to pay at the close of the cycle.

You could, as suggested above, calculate what that interest should be and go ahead and pay it.  I'd also suggest rounding up a bit just in case if that's how you want to handle it.  However, it's no big deal just to pay the residual interest when it shows up.

[Beckhsrules]

Thanks for all your queries. I think I will pay the total outstanding amount + 30$ for now . ( I believe this 30$ should do good since it has been only two days into the new cycle and it wouldnt have gotten to that much amount of interest). I will wait and see on how my statement cuts next month and report back with the findings. 

Hope I can take lessons to people after this experience