Trailing Interest / Residual Interest

Discuss anything related to interest rates & fees, like balance transfer offers, low rate cards, annual fees, etc.
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Brad Bishop
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Re: Trailing Interest / Residual Interest

Postby Brad Bishop » Mon Feb 20, 2017 5:03 pm

Vattené wrote:I thought trailing interest was a pretty common practice, but I also pay statement balances in full so don't have any personal experience. When you talked to Discover, it was clear you were talking about paying a statement balance in full that had interest accrue? It would really annoy me too, but I just thought this was standard.


Yes, I made it clear with Discover. In fact, I thought back and did carry a balance for 2-3 months over the Summer and paid it off and it all worked as expected.

To me, trailing interest isn't that common. It's uncommon enough that when I experience it, I cancel that card. It may be more common now.

I'm not saying it should be illegal or that they were particularly underhanded or anything. It's just that, again, to me, the credit card should be a loan of convenience and, as such, trailing interest acts against that.

I'd even offer this: If a lender wants to do trailing interest then that should be affected in the balances which they show online. That means that, everyday, your balance should increase and it should reflect what the payoff balance would be tomorrow (or maybe today with tomorrow in smaller print). That way it doesn't seem hidden and isn't a surprise. I think that'd work against them because it'd cause anxiousness in their borrowers seeing their balance tick up but, in reality, it's ticking up, anyway. Paying off the balance and thinking you're done, and then getting a, "Oh, wait.. Hold on.. Not just yet..." from the lender really isn't good customer relations. (IMO, of course)


Tubpbs
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Re: Trailing Interest / Residual Interest

Postby Tubpbs » Tue Feb 21, 2017 6:47 am

Brad Bishop wrote:
Vattené wrote:I thought trailing interest was a pretty common practice, but I also pay statement balances in full so don't have any personal experience. When you talked to Discover, it was clear you were talking about paying a statement balance in full that had interest accrue? It would really annoy me too, but I just thought this was standard.


Yes, I made it clear with Discover. In fact, I thought back and did carry a balance for 2-3 months over the Summer and paid it off and it all worked as expected.

To me, trailing interest isn't that common. It's uncommon enough that when I experience it, I cancel that card. It may be more common now.

I'm not saying it should be illegal or that they were particularly underhanded or anything. It's just that, again, to me, the credit card should be a loan of convenience and, as such, trailing interest acts against that.

I'd even offer this: If a lender wants to do trailing interest then that should be affected in the balances which they show online. That means that, everyday, your balance should increase and it should reflect what the payoff balance would be tomorrow (or maybe today with tomorrow in smaller print). That way it doesn't seem hidden and isn't a surprise. I think that'd work against them because it'd cause anxiousness in their borrowers seeing their balance tick up but, in reality, it's ticking up, anyway. Paying off the balance and thinking you're done, and then getting a, "Oh, wait.. Hold on.. Not just yet..." from the lender really isn't good customer relations. (IMO, of course)


Personally, I think you're overreacting. If you're going to close a card because of the existing terms and conditions on your account, you're likely just hurting yourself. At the very least, putting it in your terms, you're making things less convenient for yourself...
Amex - BCP, Platinum, Business Gold
BoA - BankAmericard Cash Rewards
Chase - Freedom, CSP, RC, Ink Plus
Citi - DC, Prestige
Discover - It

Brad Bishop
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Re: Trailing Interest / Residual Interest

Postby Brad Bishop » Tue Feb 21, 2017 7:22 am

Tubpbs wrote:Personally, I think you're overreacting. If you're going to close a card because of the existing terms and conditions on your account, you're likely just hurting yourself. At the very least, putting it in your terms, you're making things less convenient for yourself...


I get that. Also, I didn't know until CarefulBuilder's post that you basically pay in full twice and you're done. In my mind I kept thinking, "Ok, so now I have $3 rolling around in my account that I don't know about until that closing date and by the time I pay that off I owe more trailing interest on the $3... So on and so forth..." That was good to know.t

It just annoys me. Not having Amex in my pocket isn't going to make my life any worse. It's really just a thing I don't want to deal with. Truth be told they were already on the edge with the annual fee and the higher interest rate.

If every card I had ever had did the trailing interest then I'd think, "OK.. That's just how it's done." Seeing as I've been able to avoid it for most of my life it's a deal-breaker for me with a card. Typically the AF is a deal breaker (won't even apply) but I kind of let Amex by on that one because of other benefits (Delta bags free + the car rental priority insurance deal).

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CarefulBuilder14
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Re: Trailing Interest / Residual Interest

Postby CarefulBuilder14 » Tue Feb 21, 2017 12:57 pm

Can you find cases of when you've carried a balance and not faced this? If you cancel every card that does it, it seems you might end up canceling most cards you've ever paid interest on.
Warranties and sketchy merchants: Schwab Platinum
Price rewind: Costco
Travel insurance: Prestige, CSP
Perks: IHG, Hyatt
Rewards/Offers: Discover, Freedom, ED, BCE
Taxes/Misc: SPG

Limited value, might close: Arrival

Might add: First Tech, proper business card

Brad Bishop
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Re: Trailing Interest / Residual Interest

Postby Brad Bishop » Tue Feb 21, 2017 2:46 pm

CarefulBuilder14 wrote:Can you find cases of when you've carried a balance and not faced this? If you cancel every card that does it, it seems you might end up canceling most cards you've ever paid interest on.


Recently:
1) Discover (last Summer)
2) USAA Visa (it was a while back that I paid off a balance and this never came up)

I want to say Chase a few years back (Chase Disney Visa) but I'm not 100% sure if I carried a balance for more than a month, there.

It also occurred to me that it may have happened and I just didn't notice it. Like, carried a balance, paid it in full, and then was just using it daily and the trailing interest was in there and I just missed it amongst the other purchases.

augiedog
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Re: Trailing Interest / Residual Interest

Postby augiedog » Tue Feb 21, 2017 2:49 pm

I actually thought this was normal, but I never have incurred credit card interest.

If this leaves a distaste because Amex charges trailing interest while others may not, I would consider that Amex has some of the best APRs I have ever seen. When I opened my BCE, they invited me to 12.49% after the 0% period. This was about half of my APR with other cards. After having it open for about one year, I asked for a permanent reduction and it's now at 10.24%. In the event that I might ever need to carry a balance, trailing interest could be worth the expense compared to other credit card rates. The trailing interest charges are built into "minimum payment warning" section of your bill.
American Express: Blue Cash Everyday (10k), Everyday, ; Discover It (7.3k) ; Target (2.1k)

Citi: Diamond (2k) ; Bank of America: Cash Rewards (2.6k) ; Capital One: Quicksilver (3k) , Sony ; Chase: Freedom (3.7k), Slate (3k), (Amazon) ; Barclay Ring ; Synchrony: Walmart MC, Amazon, Ebates

Brad Bishop
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Re: Trailing Interest / Residual Interest

Postby Brad Bishop » Tue Feb 21, 2017 3:15 pm

For me, Amex is the only card with an AF ($95), the highest interest rate of any card I have (15.99% vs 10.9% and 6.5%).

I may be well off the mark for trailing interest, it just rubbed me the wrong way and not something I was used to. Throughout my life it's been the oddity instead of the norm. But, that being said, how often are you really "paying off balances". If you're like most people you're either, "keeping a rolling balance," (not a good idea but people do it) or paying it off each month so you wouldn't see this.

TXviking
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Re: Trailing Interest / Residual Interest

Postby TXviking » Fri May 05, 2017 1:05 pm

I've had a couple of cases where I got charged a few dollars in interest on a recently-paid-off balance that had previously been revolving.

I can't remember ever encountering a fee AFTER the first statement where I'd paid the balance in full (e.g. the penny of interest on the $2.95.)

I have run into similar silliness in other situations, though, like closing a Chase savings account and having them give me a few cents MORE than the current balance (so the savings account actually showed a negative balance after it was closed) to compensate for a few pennies in interest earned between the statement date and the closing date.

I'm so glad my job doesn't involve figuring stuff like this out. :P



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