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How not to pay interest after the intro APR expiration date?

FinStar
Moderator

Re: The exact moment of the start and stop of the interest accrual

ETA - continued from: https://ficoforums.myfico.com/t5/Credit-Cards/The-exact-moment-of-the-start-and-stop-of-the-interest...

If you had a previous balance with any interest charges (trailing or otherwise) that accrued over that period into the current statement cycle, then yes.

If you typically "float" your statement balance every month where you PIF by the due date (no trailing interest), then no finance charges would accrue.

Then again, you would need to test your own scenario(s) as you are more intimately familiar with your transactions, statement balances, including your statement dates + payment due dates.

We could go round and round on here, but for a better perspective, it would behoove you to see how that scenario plays out on your end.
Message 21 of 22
Paranoid
Contributor

Re: The exact moment of the start and stop of the interest accrual

Actually, the only my embarrassment was in the fact that I found completely different information about stopping the accruing of interest and restarting the grace period. Let us consider the situation with the normal continuous everyday use of a credit card.

 

1st version is that in order for this to happen, you need to fully pay the current balance (last statement + charges after it) to zero.

 

2nd version: According to other information (and I found it many times), this happens as soon as I pay in full the statement by due date. And, as they say, by paying the entire balance to zero, we only reduce interest payments. We, of course, will receive a residual interest in the next statement, but paying the full statement balance (not current) on time is enough to stop future interest accruing.

 

I just downloaded the Citi Bank credit card agreement, a quote about the grace period:

"Grace Period on Purchases. You won’t pay any interest on Purchases if you pay the New Balance, including any Balance Transfers, in full by the payment due date shown on your statement each Billing Period. We call this a grace period on purchases. If you don’t pay your New Balance, including any Balance Transfers, in full by the payment due date in a Billing Period, you’ll pay interest on your Purchases from the date they’re posted to your Account. You also won’t have a grace period on Purchases again until you pay the New Balance in full by the  payment due date 2 Billing Periods in a row."

 

That is, paying the current balance to zero is not the only condition for resetting the grace period and stopping interest.. At least in Citi Bank.

 

Same thing in AmEx:

"12.1 Interest is payable at the monthly percentage rate on all Charges from the date they are debited to your Account until they are fully repaid, except where an interest free period applies under 12.2 below.
12.2 On Charges, other than Cash Advances and Balance Transfers, interest is not payable only if:
• You paid the full Closing Balance on your previous monthly statement by the payment due date and;
• You pay the full Closing Balance on your current monthly statement by the payment due date."

 

@FinStar wrote:
To reset everything back to $0, you'd need to PIF everything + any remaining trailing interest as applicable. Once those 2 conditions are met then the account will become whole again. So, if you are looking to avoid any additional interest, just PIF.

That is exactly what I meant by asking you You in other thread:

@Paranoid wrote:
So, based on your words, that if I start to pay ONLY the STATEMENT amount before due date every month (as it should be normally) and never pay the full actual balance to zero, I will never regain the grace period back and will pay interest forever? Is that correct?

 

BoA CR (2), CITI DC, Chase FF, AmEx BCE, Discover It, UMB SR, USB C+, CO WMT, Synch TJX, TD TGT, CITI CC
Message 22 of 22
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