Quick question about interest charges

[Ghoshida]

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@pip3man wrote:

To provide some more clarity, this is in reference to my Ollo Rewards card. My first statement cut on 04/12 with a minimum payment of $27 due on 05/07. On 05/07 which was the due date, I only paid $100 then two days later I paid off the remaining entire balance of $2400. So I guess my question is will I be charged interest since I didn't pay it off on the due date or would it not matter because I paid it off before the current statement cycle closes.

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As others said, it depends on your T&C. But I'll offer general advice.

First off, is there a promo 0% APR offer on your card? If yes, you're fine as long as the 0% APR is valid. 

Otherwise, this is what typically happens. All purchases on your April 12 statement started accruing interest from the day you made them - since you borrowed from the lender. You were given a grace period till the due date of the statement, and the accrued interest stays hidden and isn't charged to you if you pay your statement balance in full before the due date. If you make at least the minimum payment, you will not be charged a late fee, or penalty APR. However, if you make only the minimum or above the minimum but not the full statement balance by the due date, the grace period goes off. Then, the lender unhides your accrued interest, adds it to the principal, subtracts the payment made before the due date, and calculates the new balance. This accrues interest till you pay the entire balance off.

But then, as longtimelurker mentioned, the grace period doesn't come back on immediately. Since interest has started accruing and there is some trailing interest when you are paying off the balance that's showing up, it takes another 1-2 statement cycles for the interests to completely go off, and for the grace period to be restored. 

This is why, unless you have a promo APR, you should always pay off the full statement balance on or before the due date to avoid any interest. So in your case, it's very likely that you will see interest charged on your next statement. In any case, let us know what you see on the statement.

[Brian_Earl_Spilner]

I don't understand why everyone is making it so confusing.

If there's a grace period, as long as the balance is paid within that period (usually due date), there's no interest charge. If you don't pay the entire balance by end of grace period, you forfeit the next month's grace period. How long you forfeit depends on T&C, but is usually 2 cycles of 0 balance.

[Anonymous]

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@Brian_Earl_Spilner wrote:

I don't understand why everyone is making it so confusing.

If there's a grace period, as long as the balance is paid within that period (usually statement cut), there's no interest charge

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And I don't understand that statement!    Let's say my statement cycle ends on the 1st of the month.   Then my January statements cuts on Feb 1, and I will have no interest if I pay by the due date, which is going to be around Feb 20th.   Certainly paying by Feb 1 will also avoid interest, but you also have a lot longer.   Only due date really matters.

[Brian_Earl_Spilner]

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@Anonymous wrote:

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@Brian_Earl_Spilner wrote:

I don't understand why everyone is making it so confusing.

If there's a grace period, as long as the balance is paid within that period (usually statement cut), there's no interest charge

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And I don't understand that statement!    Let's say my statement cycle ends on the 1st of the month.   Then my January statements cuts on Feb 1, and I will have no interest if I pay by the due date, which is going to be around Feb 20th.   Certainly paying by Feb 1 will also avoid interest, but you also have a lot longer.   Only due date really matters.

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EDIT: just realized what I typed. You're right. It would be the due date. Will go back and fix.

[jcooks]

Isn't Ollo a starter or rebuilder card?  I see in your sig you have almost 200k in CL.  Aren't there other cards that would better fit your profile?  They are a predatory lender, their terms aren't that great.  I'd be surprised if they even offer a grace period.  I would put them on the Credit One category of cards.

[pip3man]

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@jcooks wrote:

Isn't Ollo a starter or rebuilder card?  I see in your sig you have almost 200k in CL.  Aren't there other cards that would better fit your profile?  They are a predatory lender, their terms aren't that great.  I'd be surprised if they even offer a grace period.  I would put them on the Credit One category of cards.

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No the cards in my sig were pre-BK7. Haven't gotten a chance to update that.