help with basics

[justme62]

I had a credit card balance of $5987.75, which I paid off by the payment due date.  I expected to have a zero balance on the next statement, but they (citi card) charged me interest.  Is that how it works?  I thought that the whole idea of "paying off your balance every month" was to avoid interest?  What am i misunderstanding?

Previous balance $5,987.75
Payments -$5,987.75
Credits -$0.00
Purchases +$0.00
Cash advances +$0.00
Fees +$0.00
Interest +$61.86

Thanks in advance for your help.

[Anonymous]

Citi does that alot but if you call them and call them on it they will credit the account. I dont deal with them because I burned them in BK but even if I could deal with them I would not choose to. 

[justme62]

thank you for the help and advice!

[Anonymous]

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@justme62 wrote:

I had a credit card balance of $5987.75, which I paid off by the payment due date.  I expected to have a zero balance on the next statement, but they (citi card) charged me interest.  Is that how it works?  I thought that the whole idea of "paying off your balance every month" was to avoid interest?  What am i misunderstanding?

Previous balance $5,987.75
Payments -$5,987.75
Credits -$0.00
Purchases +$0.00
Cash advances +$0.00
Fees +$0.00
Interest +$61.86

Thanks in advance for your help.

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Were you previously carrying that balance for a time?

[bdhu2001]

When you say you paid by the due date, did you pay on line with CitiBanks site and @ least a day or two before the due date? I'd contact them, just like the previous poster mentioned, but also make sure you're paying in advance of the due date so that there is no way for Citi or whoever you're working with to dispute it. I know their site states "payments received by____ will be credited___," but always err on the side of caution.

[scorewatcher7]

this is a common misconception.

You have to pay the balance before the current statement closes for the period you made the charges, not by the due date on the statement once the statement has cycled. 

In other words, if your current statement period is Mar 1-Mar 30, you have to PIF by the 30th. On Apr 1, the statement will read that you ended with a $0, and they can't charge interest. 

[justme62]

Yes, I had been previously carrying the balance for several months. 

The statement period was from 12-3-14 thru 1-2-15.  I received the online statement on 1-3-15. Due date was the 28th.  I made one payment on the 10th and paid off the rest on the 28th. It was credited as being paid on the 28th.   Here is citi's response to my inquiry about the balance due on my statement for 1-3-15 thru 2-3-15.  I received the online statement today, 2-4-15.

I guess it is what it is. 

"Thank you for your inquiry.

The interest shown on your statement is generally called residual, or trailing interest. This is the interest charged against the account balance from the last cycle's statement date until the date you paid in full. If you paid on your due date, the interest was assessed against the balance that existed on your account for about 25 days.

If there is any way we can be of further assistance, please feel free to contact us."

[takeshi74]

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@justme62 wrote:

I thought that the whole idea of "paying off your balance every month" was to avoid interest?  What am i misunderstanding?

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The "every month" part.

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@scorewatcher7 wrote:

You have to pay the balance before the current statement closes for the period you made the charges, not by the due date on the statement once the statement has cycled. 

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That is incorrect.  If PIF'ed every month by the due date and there was no portion of the balance not subject to grace period (e.g. cash advances, etc) then interest can be avoided.  Paying prior to statement date is used to reduce reported balances/utilization.  You can certainly pay prior to statement end (since it falls before the due date) to avoid interest as well but it's not necessary.

The OP has indicated that a balance was previously being carried.  In such cases there is residual interest that has to be paid off.

[Anonymous]

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@justme62 wrote:

Yes, I had been previously carrying the balance for several months. 

The statement period was from 12-3-14 thru 1-2-15.  I received the online statement on 1-3-15. Due date was the 28th.  I made one payment on the 10th and paid off the rest on the 28th. It was credited as being paid on the 28th.   Here is citi's response to my inquiry about the balance due on my statement for 1-3-15 thru 2-3-15.  I received the online statement today, 2-4-15.

I guess it is what it is. 

"Thank you for your inquiry.

The interest shown on your statement is generally called residual, or trailing interest. This is the interest charged against the account balance from the last cycle's statement date until the date you paid in full. If you paid on your due date, the interest was assessed against the balance that existed on your account for about 25 days.

If there is any way we can be of further assistance, please feel free to contact us."

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Yes. I figured as much.

Just pay the interest charge next month unless you can afford to take care of it now.

[justme62]

thank you for your help.  the residual interest makes sense and i understand it now.  thanks everyone.