How exactly does interest work on a credit card?

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How exactly does interest work on a credit card?

Postby spence_tricky » Thu Dec 27, 2012 11:23 pm

I read the basic article on interest (the three ways its compounded) and all, but I was left with a question. Or rather, I just need confirmation - how exactly do I avoid interest completely on my card?

Let's say my statement ends on the 8th of January. With my Citi Forward card, I know that if I go to the ATM and make a cash payment, it's processed more or less instantaneously. So here's the following scenarios:

1. I make a full payment on the 7th during business hours

2. I make a full payment on the 7th after business hours

3. I make a full payment on the 8th during business hours

4. I make a full payment on the 8th after business hours

Basically, what I'm trying to understand, is under which situations interest is waived. During my last statement, I actually ended up making the payment after business hours on the day the statement closed. When my statement came out, I was charged interest - but I'm pretty sure they waived it afterward, since when I look up my statement, there's a credit for that same amount and it's labeled "Credit Interest Charges".

Something else I'd like to know is this. Let's say I make a purchase a day before my statement closes. Because of this, it's not posted until after my statement closes. I can't be charged interest on that purchase right?

I realize all this information is probably readily available in the forum, but I'm new to the site and haven't exactly gotten the hang of navigation yet, so I hope you guys won't blast me for not using the "noob problem solver". Thanks in advance guys.

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Postby MemberSince99 » Sat Dec 29, 2012 7:54 pm

You'd have to talk with a banker at Citi about that. And even they may not know the details. The rule is you have to pay by the "due date" to avoid interest except on Cash Advances and any other special cases. How exactly they apply the minute details of the rules so that you can pay at the last possible instant to avoid interest, I don't know. I'm of a different mindset - I don't wait for the last instant I just pay online basically as soon things post and I never have to worry about it, and the few cents a year I'd get in interest on that money isn't worth worrying about to me.

So I guess, are you going to earn a lot of money from paying at 11:59 PM on the last possible day vs paying a few hours sooner? If not, why play with it? If anything happens and your account isn't properly credited it could cost you enough that you'll wish you hadn't done it that way.

But I would call them NOT their useless foreign CS but an actual analyst and find out if you really want to skate every possible millisecond on it.

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