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My credit card company is unable or unwilling to tell me how it calculates trailing/residual interest. I understand the concept in general, but am struggling to find specifics.
Might anyone be able to provide an Excel template (or link), or know of a good online article or text on how to calculate residual interest?
The entire goal here, of course, is to have the card report zero.
Thanks.
EQ | 850 | 2 INQ (Auto, Mort) | 7y4m |
EX | 850 | 6 INQ (2 CC, 2 mort, 2 auto) | 7y |
TU | 850 | 1 INQ (CC) | 6y8m |
3/24 | 1/12 | AoYA 10m | AoOA 24y2m | ~1% |
To illustrate how residual interest works, if you charge $500 in September which has the statement date as September 30, and you do not get a bill until, say, October 7, after the start of the October billing cycle. You then pay $450, which the issuer receives and credits on October 10. You then on October 15 charge another $200. Your total daily balance for the October billing cycle (closing on October 31st), is calculated thus:
Oct. 10/1 --> 10/10 (10 days @ $500)=$5,000
Oct. 10/10 --> 10/15 (5 days @ $50) =$250
Oct. 10/15 --> 10/31 (16 days @$250) =$4,000
Total Daily Balance: $9,250
This "Total Daily Balance" is then divided by the number of days in the current billing cycle (31 for Oct), yielding an average daily balance of (9,250.00/31) = 298.39, to which the finance charge is applied. Let say "18.25%" compounded daily .
(0.1825/365)= daily interest = 0.0005
(Daily Interest * average daily balance * days in cycle = total interest due
(0.0005*298.39*31) = $4.63 interest for October.
As you can see, the numbers change daily and depend on when money is received, credited, and items charged.
EQ | 850 | 2 INQ (Auto, Mort) | 7y4m |
EX | 850 | 6 INQ (2 CC, 2 mort, 2 auto) | 7y |
TU | 850 | 1 INQ (CC) | 6y8m |
3/24 | 1/12 | AoYA 10m | AoOA 24y2m | ~1% |