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Always pay the statement balance in full, no interest (as long as you have a grace period card). I like to use cards after closing, then ride for the additional time past the next statement cut, if I choose.
Edit: If you've already fallen into the carrying balance thing, you're literally going to have to zero the card out to take advantage of the system, which could take an additional few statements.
Most cards calculate interest on the average daily balance. You usually have no grace period if you did not PIF the previous statement. So yes you could in fact be paying interest on part of that $600 and not just the statement balance. Read your card holder agreement.
To to clarify you will not be charge interest this month but if you do not PIF the statement balance then new purchases in the future have no grace period and are subject to interest right away.
Pretty certain the below example is accurate and should help you:
nov 30--statement cuts at 313
dec 5--you chage another 200
dec 22--at due date you pay the min of 31. ]
Dec 30 statement cuts charging you interest on the 282 (313-31) for 30 days, and interest on the 200 for 25 days
@compassion101 wrote:Pretty certain the below example is accurate and should help you:
nov 30--statement cuts at 313
dec 5--you chage another 200
dec 22--at due date you pay the min of 31. ]
Dec 30 statement cuts charging you interest on the 282 (313-31) for 30 days, and interest on the 200 for 25 days
That has always been my understanding. As long as you pay in full every statement the cash back will be worth it.
@Chris679 wrote:
You are misunderstanding. There does not have to be a zero balance. You only need to pay the statement balance in full each month to avoid any and all interest. If you fail to do this however you will not just pay interest on the leftover balance but also on new charges they you made because there is no longer a grace period.
Okay. Thanks for explaining. I did understand but for some reason your comment actually threw me. I just didn't read it correctly. Well good to know. I'm paying the statement balance next week so I'll be good
If you're ever interested to know how to calculate amount of interest you have to pay: {Link removed - MarineVietVet, myFICO moderator}