- Centurion Member
- Posts: 3929
- Joined: Thu May 08, 2014 7:42 pm
- Location: United States
takeshi wrote:Definitely not an HP. If you're using the card for rewards, keep in mind that you'll lose your grace period if you carry a balance.
Can you clarify what that means?
This is my moderately-informed understanding. Someone may make a minor correction or two, but get verification from others.
Let's say you buy something on December 1. The transaction is added to your card balance December 3. The statement period ends on December 20, and the payment is due January 10.
The bank starts to accrue interest on the purchase on December 3. If you pay in full by January 10, the accrued interest disappears because you paid within the grace period. Note that this grace period doesn't apply to most cash advances (I say "most" because Discover and maybe a few others allow "cash over" on some transactions).
If you don't pay for a purchase by January 10, then the interest is charged. You pay interest going back to December 3. The interest doesn't wait until December 20 or January 10 to kick in.
As you can imagine, banks can make a lot of money when someone pays just a little less than the full balance (and especially if someone is just a little late).
I've paid less than the full balance...but at a 0% APR it doesn't matter if I'm being "charged" interest going back to the date I made a purchase months ago.
Keeping indefinitely: IHG, SchwabPlat, CSP, Discover, Freedom, ED, BCE, Hyatt
May close or PC: Prestige, Arrival, BrooksBros
AA Platinum converting into Costco
Might add: Proper business card, CSR, Ritz, Delta Gold, First Tech
Letting new accounts cool off since May