Understanding PIF to avoid interests

[Lin55]

i.e.

My statement balance is $5000. Minimum Payment is $50 due March 25th and the next closing date is March 28th (today). I paid $50 well before March 25th to avoid a late payment. I then paid the remaining $4950 (I earn most of my $$ after the 25th) on March 27th (after minimum due date) and PIF'd the remaining balance. 

Was I supposed to PIF before the minimum due date to avoid interests? Or just PIF before the next statement closing date? TIA

ETA: typo

[benandjerry]

Yes. Presuming the total $5000 was accrued in the previous month (and not built up over a longer time), you were not charged interest until March 25. Since you only paid $50 on the due date, the other $4950 started accruing interest as of March 25. 

On March 28, your statement will be 4950$, plus whatever you purchased between when the last statement cut (assuming feb 28) and march 28, plus the interest you now accrued.

If you want to avoid paying interest, you must pay the total statement balance between the date the statement is generated, and the date it is due.*

*except if it's a CreditOne card, they start charging interest from the moment you make a purchase.

[benandjerry]

Addition: not sure what the limit of the card is, but if you only pay the minimum amount due and you are close to your limit on your card, that will probably make the card issuer quite nervous.

This is because it is a significant indicator you may not be able to handle the amount of credit. It is possible the issuer's system even automatically freezes your account or applies a CLD. 

[Lin55]

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@benandjerry wrote:

Yes. Presuming the total $5000 was accrued in the previous month (and not built up over a longer time), you were not charged interest until March 25. Since you only paid $50 on the due date, the other $4950 started accruing interest as of March 25. 

On March 28, your statement will be 4950$, plus whatever you purchased between when the last statement cut (assuming feb 28) and march 28, plus the interest you now accrued.

If you want to avoid paying interest, you must pay the total statement balance between the date the statement is generated, and the date it is due.*

*except if it's a CreditOne card, they start charging interest from the moment you make a purchase.

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Thanks for the info! I understand that I shall PIF BEFORE the due date now. LOL. I live and learn. However, I see a descepancy in your statement highlighted in red...

It is March 28th and my statement will show a statement closing balance of $0, plus whatever i purchased between Feb 28th and March 28th since as I said, I paid $50 first then paid $4950 on March 27th which payments posts on the same day.  

Does that change things?

[Anonymous]

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@Lin55 wrote:

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@benandjerry wrote:

Yes. Presuming the total $5000 was accrued in the previous month (and not built up over a longer time), you were not charged interest until March 25. Since you only paid $50 on the due date, the other $4950 started accruing interest as of March 25. 

On March 28, your statement will be 4950$, plus whatever you purchased between when the last statement cut (assuming feb 28) and march 28, plus the interest you now accrued.

If you want to avoid paying interest, you must pay the total statement balance between the date the statement is generated, and the date it is due.*

*except if it's a CreditOne card, they start charging interest from the moment you make a purchase.

---

Thanks for the info! I understand that I shall PIF BEFORE the due date now. LOL. I live and learn. However, I see a descepancy in your statement highlighted in red...

It is March 28th and my statement will show a statement closing balance of $0, plus whatever i purchased between Feb 28th and March 28th since as I said, I paid $50 first then paid $4950 on March 27th which payments posts on the same day.  

Does that change things?

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From what I remember (which might be wrong!) the statement in red isn't quite right either.   Most good credit cards have a grace period.   If you start with a 0 balance at the beginning of the cycle, and pay in full by the due date, no interest is charged.  But if you don't, interest is charged on all the purchases.   So let's say Jan 1 balance is 0.  You charge $5000 Jan 2, and nothing else.  Statement cuts say Jan 31th, with a due date of Feb 15.  On Feb 15, you pay $50.   I think you will be charged interest on $5000 from Jan 2-Feb 15, and on $4,950 from then on.   This is why it often takes paying in full for two consecutive cycles to get rid of interest.

Others, please correct!

[Lin55]

Dang, I am lost. lol Ok another, more simple i.e.:

Only one $5000 (1 transaction) purchase on Feb 25th.

Statement closing date: Feb 28th.

Now my Feb 28th statement says: $5000 balance.

Minimum payment of $50 Due on Date: March 25th

Next closing statement date: March 28th

I pay the $50 minimum on March 25th.

I then pay $4950 on March 27th.

My statement closes on March 28th and now shows a total balance of $0.00 on this March 28th statement.

Was I charged any interest?

[Plasticard]

Nope, in

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@Lin55 wrote:

Dang, I am lost. lol Ok another, more simple i.e.:

Only one $5000 (1 transaction) purchase on Feb 25th.

Statement closing date: Feb 28th.

Now my Feb 28th statement says: $5000 balance.

Minimum payment of $50 Due on Date: March 25th

Next closing statement date: March 28th

I pay the $50 minimum on March 25th.

I then pay $4950 on March 27th.

My statement closes on March 28th and now shows a total balance of $0.00 on this March 28th statement.

Was I charged any interest?

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Nope, interest will start on March 29th, since you paid in full before the payment due date, you paid no interest.

[benandjerry]

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@Plasticard wrote:

Nope, in

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@Lin55 wrote:

Dang, I am lost. lol Ok another, more simple i.e.:

Only one $5000 (1 transaction) purchase on Feb 25th.

Statement closing date: Feb 28th.

Now my Feb 28th statement says: $5000 balance.

Minimum payment of $50 Due on Date: March 25th

Next closing statement date: March 28th

I pay the $50 minimum on March 25th.

I then pay $4950 on March 27th.

My statement closes on March 28th and now shows a total balance of $0.00 on this March 28th statement.

Was I charged any interest?

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Nope, interest will start on March 29th, since you paid in full before the payment due date, you paid no interest.

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Incorrect, since the due date was march 25, not march 29. You will pay interest on the $4950 for 2 days: march 26 and 27.

[DaveSignal]

This is getting way too complicated.

If you pay your full statement balance by the due date every month, you will not be charged any interest.  Thats it.  Its easy.

If you don't pay the full statement balance each month, you do not have a grace period and will be charged interest on purchases from the date they post, plus interest on any balance carried over from the previous statement.

ie:  i charge $5000.  get statement for $5000.  I continue using my card and make an additional purchase for $1000.  I pay my $5000 statement balance by the due date.  I receive a new statement for $1000. I make more purchases totalling $xxxx. I pay $1000 on the due date.  I have not been charged any interest.

[Anonymous]

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@benandjerry wrote:

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@Plasticard wrote:

Nope, in

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@Lin55 wrote:

Dang, I am lost. lol Ok another, more simple i.e.:

Only one $5000 (1 transaction) purchase on Feb 25th.

Statement closing date: Feb 28th.

Now my Feb 28th statement says: $5000 balance.

Minimum payment of $50 Due on Date: March 25th

Next closing statement date: March 28th

I pay the $50 minimum on March 25th.

I then pay $4950 on March 27th.

My statement closes on March 28th and now shows a total balance of $0.00 on this March 28th statement.

Was I charged any interest?

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Nope, interest will start on March 29th, since you paid in full before the payment due date, you paid no interest.

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Incorrect, since the due date was march 25, not march 29. You will pay interest on the $4950 for 2 days: march 26 and 27.

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And as I said, I think this is also incorrect.  By not paying in full, you will get charged interest on each item from the date it posted.