When does credit card interest start?

Discuss anything related to interest rates & fees, like balance transfer offers, low rate cards, annual fees, etc.
7 posts
gotrippedoff
 
Posts: 2
Joined: Thu Nov 11, 2010 3:22 pm

When does credit card interest start?

Postby gotrippedoff » Thu Nov 11, 2010 3:28 pm

(Updated October 7, 2013) I had a $1,500 charge and paid $300 before the due date and then the remaining amount 4 days after the due date. Then I get my next credit card bill and I have interest charges of nearly $30. When does credit card interest start because I see this as nothing other than getting ripped off. THere is no way that 4 days of interest on a $1,200 balance would equal out to be $30.


JL70
Platinum Member
Platinum Member
 
Posts: 53
Joined: Sat Nov 06, 2010 11:05 am
Location: TN

Postby JL70 » Thu Nov 11, 2010 7:53 pm

Please give some more details, purchase day, statement date, interest rate, date of the payments.
There are too many variables, but interest start on the day you made the purchase,usually there's a grace period of 21-25 days, but if you didn't pay in full, interest for the outstanding amount will accrue from the day you made the charge. If you have a high APR let's say 25% or more, it gets bad really soon.
Let's assume you have 25% APR and kept $1200 revolving for 30 days:

$1200 x 25%=$300.00 (Annual)
$300 / 365=$0.82 daily interest
$0.82 x 30 days=$24.65

Plus the days the other $300 accrued since you didn't pay in full when you got your bill.

DoingHomework
Centurion Member
Centurion Member
 
Posts: 707
Joined: Tue Sep 22, 2009 1:15 pm
Location: Arizona

Postby DoingHomework » Fri Nov 12, 2010 12:29 pm

If you pay your full balance by the due date you will not be charged interest if you also paid the previous balance in full. If you did not pay the full balance by the due date (which you admit you did not) then you will pay interest daily on the balance each day. In some cases you pay based on "two cycle average daily balance." That means the even if you pay the next balance in full by the due date you might still get charged interest.

$30 is not a lot of money. And not to be too critical, but the time to learn about how interest is charged is BEFORE you sign the cardholder agreement. This would have been spelled out in the agreement. If you did not like the terms you should not have used the card.

User avatar
Mogul of Pineapples
Centurion Member
Centurion Member
 
Posts: 1271
Joined: Sun Jun 01, 2008 11:32 pm
Location: Smogland

Postby Mogul of Pineapples » Sat Nov 20, 2010 5:21 pm

Great points. A lot of people don't understand that interest is charged from date of purchase if payment is not received in full during the grace period. So to answer the question of when does credit card interest start, it's the moment you make the purchase if you aren't going to pay it off when the bill comes.
Disclosure: I am a moderator/paid staff of this site, which does have advertising relationships with some credit cards that are discussed and linked to. Regardless, anything I say is my honest opinion.

Current Cards:
American Express: Blue Cash, Simply Cash Bank of America: WorldPoints Platinum Plus Chase: Amazon, British Airways, Cash Plus Rewards, Freedom, Ink Cash Citi: Thank You Premier, Dividend Platinum Select Discover: More
Primary Everyday Card: American Express Blue Cash
Primary Travel Card: Chase Sapphire Preferred

Suitelife
Green Member
Green Member
 
Posts: 7
Joined: Fri Nov 26, 2010 12:20 pm
Location: the beach

Postby Suitelife » Sun Nov 28, 2010 1:48 pm

When does credit card interest started on the deferred interest store cards? I might get one but dont get how it is done. Will I get charged interest on the full purchase price if I dont pay it off in time or only back interest on the unpaid amount?

User avatar
Pete838
Centurion Member
Centurion Member
 
Posts: 197
Joined: Sun Dec 12, 2010 11:26 am
Location: Florida

Postby Pete838 » Wed Dec 15, 2010 8:41 pm

Suitelife wrote:When does credit card interest started on the deferred interest store cards? I might get one but dont get how it is done. Will I get charged interest on the full purchase price if I dont pay it off in time or only back interest on the unpaid amount?


A store card with 6 months same as cash (i.e. deferred interest), or by any other term or name, starts charging interest when you make the purchase, but will forgive the interest IF you pay in full in the grace period. If you don't pay it off in the grace period, though, the interest (all of it, since the purchase) gets added to the tally. This can be a great deal if you can pay the purchase off. If you can't, though, it adds up quickly, because store cards usually have pretty high interest rates.
Freedom is never more than one generation away from extinction. We didn't pass it to our children in the bloodstream. It must be fought for, protected, and handed on for them to do the same.
Ronald Reagan

infomaniac
Platinum Member
Platinum Member
 
Posts: 58
Joined: Thu Nov 04, 2010 6:45 pm
Location: Boston

Postby infomaniac » Sat Jan 08, 2011 2:51 pm

To reiterate the above posting the deferred interest will be levied on the entire purchase price from date of purchase. For this reason whether 10% is paid off during the 6 months or 90%, the consequences will be equally costly. Do not ever use a deferred financing promotion without absolute certainty of the ability to pay it off in full during the promotional period.



Return to “Finance Charges & APR Compare”

Who is online

Users browsing this forum: No registered users and 0 guests