Interest Question

[Anonymous]

Hello,

A simple question about credit card interest. 

If I have a credit card for several months and I use it in a manner such as this..

Month 1: $540

Month 2: $600

Month 3: $550

and before the next pay period, do I only need to pay the previous month's balance or do I need to pay whatever the full balance is before the bill? 

For instance, say I get my previous month's balance as the $540, pay off the $540 before the final due date, but charge $100 into Month 2 before that final due date for the previous balance, am I than going to wind up having interest on top of that $100? Or do I simply need to pay off the previous month in full each time (as long as no balance from any months before that carry-over)?

Basically as long as during the first pay period, I pay $540, second pay period I pay off $600, third I pay off $550, will I be good to avoid interest?

[HeavenOhio]

You need to pay the balance printed on the statement by the due date. New charges will be applied to the next statement balance and will need to be paid by the due date on that statement. Of course, you can always pay toward those charges early if you'd like.

[pizza1]

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wrote:

Hello,

A simple question about credit card interest. 

If I have a credit card for several months and I use it in a manner such as this..

Month 1: $540

Month 2: $600

Month 3: $550

and before the next pay period, do I only need to pay the previous month's balance or do I need to pay whatever the full balance is before the bill? 

For instance, say I get my previous month's balance as the $540, pay off the $540 before the final due date, but charge $100 into Month 2 before that final due date for the previous balance, am I than going to wind up having interest on top of that $100? Or do I simply need to pay off the previous month in full each time (as long as no balance from any months before that carry-over)?

Basically as long as during the first pay period, I pay $540, second pay period I pay off $600, third I pay off $550, will I be good to avoid interest?

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Hello, and welcome to the boards!! Great question, as some folks just starting out with credit have the same question.  

Simply answer....you can charge all you want on your card, but make sure you pay the previous statement balance  before the due date, or you'll occur interest charges.

EX: say your statment just cut for $540, and is due by 2/20.  Pay $540, by 2/20 to avoid interest charges on the $540, but you can still continue to use the card.  You only have to pay the $540 now, the other charges after the statement cut, go on your next bill. 

 I would recommend paying at the least, 3 days defore the due date to ensure its on time. 

[Anonymous]

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wrote:

Basically as long as during the first pay period, I pay $540, second pay period I pay off $600, third I pay off $550, will I be good to avoid interest?

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This is true only if your account has a grace period, and the balance only contains charges that have a grace period (usually "purchase" has a grace period while "cash advance" and "balance transfer" do not). You may also lose your grace period on purchases if you didn't pay the full balance shown on your statement n by the due date prior to statement n+1, which means the daily balance during statement n to n+1 will incur interest, including new purchases.

[mkhan1093]

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wrote:

Hello,

A simple question about credit card interest. 

If I have a credit card for several months and I use it in a manner such as this..

Month 1: $540

Month 2: $600

Month 3: $550

and before the next pay period, do I only need to pay the previous month's balance or do I need to pay whatever the full balance is before the bill? 

For instance, say I get my previous month's balance as the $540, pay off the $540 before the final due date, but charge $100 into Month 2 before that final due date for the previous balance, am I than going to wind up having interest on top of that $100? Or do I simply need to pay off the previous month in full each time (as long as no balance from any months before that carry-over)?

Basically as long as during the first pay period, I pay $540, second pay period I pay off $600, third I pay off $550, will I be good to avoid interest?

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Yes this is correct for purchases. To avoid interest, I would just add AutoPay for "Full Statement Balance" - this way you'll never have to pay a cent in interest. As stated previously, interest tends to apply immediately for cash advances but you shouldn't be doing that anyway