OK so I'm new here, and I find it slightly confusing to avoid paying interest while using my cards and paying in full. One is Cap1 Quicksilver, the other BofA 123 Rewards. I just read BofA's terms, and they compute "average daily balance" - the average balance for every day of the cycle - and charge interest on that? I don't see how to avoid paying interest if I carried any balance at all during the month, under this scenario. Because even if it's paid off when they calculate, they will still compute all the days of the cycle, including when it wasn't paid? My payment due date is on the 5th for BofA.
On Cap1, the due date is on the 25th. The statement cuts on the 28th and interest is billed right before that. Here even my rudimentary math skills tell me if I PIF on the 25th, I shouldn't see any interest. I think the due dates are changeable on both cards.
Any tips on PIF strategy? Or illuminating links on avoiding interest? Thanks
@Bman70 wrote:
OK so I'm new here, and I find it slightly confusing to avoid paying interest while using my cards and paying in full. One is Cap1 Quicksilver, the other BofA 123 Rewards. I just read BofA's terms, and they compute "average daily balance" - the average balance for every day of the cycle - and charge interest on that? I don't see how to avoid paying interest if I carried any balance at all during the month, under this scenario. Because even if it's paid off when they calculate, they will still compute all the days of the cycle, including when it wasn't paid? My payment due date is on the 5th for BofA.
On Cap1, the due date is on the 25th. The statement cuts on the 28th and interest is billed right before that. Here even my rudimentary math skills tell me if I PIF on the 25th, I shouldn't see any interest. I think the due dates are changeable on both cards.
Any tips on PIF strategy? Or illuminating links on avoiding interest? Thanks
Average daily balance is for the balance you carry that is not subject to grace period. My BofA statement has this PAYING INTEREST statement above the CALCULATION OF BALANCES section:
"We will not charge interest on Purchases on the next statement if you pay the New Balance Total in full by the Payment Due Date, and you had paid in full by the previous Payment Due Date."
This pretty much means that if you start with a zero balance on (say) May 8th statement and charge up some amount during May/early June, you have until the next (June) statement's due date (i.e. July 5th) to pay it without incurring interest.
Now if you start with a zero balance on your May statement, run up a balance, and June's statement cuts with a balance, and you pay half of it, the other half accrues interest from the purchase date. So if you charged $2k and paid $1k of it by the July 5 due date in the above example, you'd be paying interest on $1k from purchase date to payment date, starting with the July statement that's due August 5th.
This is also why you will pay interest after paying a running balance off (i.e. if you have a balance for several months and then finally PIF, you'll have a partial month's interest to pay since your grace period had long expired).
I think I got all the right numbers there, and welcome any correction or simplification 
@Membersince2013 wrote:
To avoid interest, pay the full statement balance and not the minimum or anything close to the minimum. For example if I have a statement balance of $400, but only paid $350 at or before the due date, interest will be charged on the remaining $50 and it will carry over to whatever balance I have before the next statement. Basically, pay in full at or before the due date. Pay what the "statement balance" says.
Actually interest would be charged based on the avg. daily balance of the account during the preceeding cycle. OP to avoid interest charges be sure to PIF the statement balance on or before the due date as stated.
OK thanks, I was getting confused by the actual balance vs. the New Balance Total. As long as I pay the New Balance per the statement, I can still be charging to the card but that won't factor until next statement's interest. I never thought about this before and have been paying decent interest that likely negates any rewards I get.. looking forward to changing that.
@Bman70 wrote:OK thanks, I was getting confused by the actual balance vs. the New Balance Total. As long as I pay the New Balance per the statement, I can still be charging to the card but that won't factor until next statement's interest. I never thought about this before and have been paying decent interest that likely negates any rewards I get.. looking forward to changing that.
When I started looking at the interest I was paying, even paying 10% over minimum, I just about fell on the floor. A lot of these companies depend on people not looking at the details, or getting confused with them. When you escape you're in good shape.
