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I have a question. I have been using credit cards for more than three years, and always paid in full the balance of the statement, never paying interest. I wanted to figure out what would happen if I did not pay the full balance of the statement by the due date.
If I’ve always paid earlier and had grace period active, at some point I don’t pay the last bill in full by the due date, from what exact moment does the interest begin to accrue? From that exact payment due date? Or from the first day of the current billing cycle?
And the second question - having lost the grace period, and having a situation with interest accrual. What is the necessary condition for interest to cease to accrue? If at some point I pay the last bill in full before the due date, from that exact moment when CCC receives the payment, the interest ceases to accrue?
@Paranoid wrote:I have a question. I have been using credit cards for more than three years, and always paid in full the balance of the statement, never paying interest. I wanted to figure out what would happen if I did not pay the full balance of the statement by the due date.
If I’ve always paid earlier and had grace period active, at some point I don’t pay the last bill in full by the due date, from what exact moment does the interest begin to accrue? From that exact payment due date? Or from the first day of the current billing cycle?
And the second question - having lost the grace period, and having a situation with interest accrual. What is the necessary condition for interest to cease to accrue? If at some point I pay the last bill in full before the due date, from that exact moment when CCC receives the payment, the interest ceases to accrue?
Read the fine print of your credit card agreements since they can have exceptions to billing policies.
Generally speaking, if you PIF on or before your "Due Date", you pay no interest.
Interest begins to accrue the day after your due date normally. (But the bank may say they must receive your payment by a certain time to post the same day. So maybe after 8 p.m., for example, you'll be paying "late".)
Interest should stop accruing the day your payment is posted to pay off your outstanding balance.
The "billing cycle" dates are separate from when interest stops and starts.
If you want to calculate how much interest you are paying, divide the annual APR % by 12 to get a monthly rate.
So for example 21.00% expressed as 0.21 / 12 = 0.0175 on a monthly basis.
If your balance is $1000 and you carry it the full month, you would pay $17.50 per month in interest.
If you pay it off mid-month, prorate the charges by approximate number of days.
@Aim_High wrote:Interest should stop accruing the day your payment is posted to pay off your outstanding balance.
You mean it stops accruing only after paying off to zero? What happens if I just start to pay not to zero, but the statement balance only and thus, the account never comes to $0?
@NRB525 wrote:
We went through this in excruciating detail in your other thread.
I do not agree. I have a simple question, and there is no answer for it in my other thread:
@Paranoid wrote:
What happens if I just start to pay not to zero, but the statement balance only and thus, the account never comes to $0?
@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.
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?