Underpayment interest calculation!??

Discuss anything related to interest rates & fees, like balance transfer offers, low rate cards, annual fees, etc.
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2percentPlus
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Underpayment interest calculation!??

Postby 2percentPlus » Mon Jan 07, 2013 11:00 pm

Let me start by saying I've only ever paid interest three times now. Once when I was shuffling cards, once when I didn't pay in full and forgot, and now this month.

This is on a Discover, I had a balance of $16,170. I paid $16,000 and then made purchases during the month of $9700. I got hit with $181 in interest.

Now besides the fact that this is at 22.9%, which I don't even know how is legal if over 18% is usury for non default rates, why is it that I'm charged interest on $9300 and not the $200 unpaid balance from the previous month? Why am I being charged interest on current month purchases?

It's ridiculous because the $180 interest is more than the $170 balance owed and if I go pay off the current $10,000 balance now it's like that $180 would have covered the $170 not paid last time.

I never pay interest because I need the money, I just make mistakes with payments like this


trumpet-205
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Postby trumpet-205 » Tue Jan 08, 2013 1:52 am

Because when you pay partially, grace period expires. When grace period expires, all purchases, regardless of when, will be charged of interest.

You see, each time you swipe your card interest begins to accumlate (interest is calculated daily). But you don't need to pay interest so long as you pay in full (grace period). When you failed to pay in full then you are required to pay calculated interest.

Is not ridiculous, it is business. You learned it in the hard way.

22.9% is normal for standard rate. Penalty APR usually goes from 25% to 30%.
In My Wallet:
Citi Forward (12/2010) | Citi TY Preferred (05/2011) | Chase Freedom (11/2011) | GECRB/PayPal (05/2012)
Discover it (07/2012) | AMEX BCP (09/2012) | TD/Target REDCard (10/2012) | Chase Ink Classic (11/2012)
BofA BBR (04/2013) | FNBO/Overstock.com (02/2014) | Barclaycard Arrival (04/2014) | FIA/Fidelity AMEX (04/2014)

Gamma
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Postby Gamma » Tue Jan 08, 2013 5:52 am

trumpet-205 wrote:Because when you pay partially, grace period expires. When grace period expires, all purchases, regardless of when, will be charged of interest.

I did not know this. Does this only apply to Discover or all cards?

trumpet-205
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Postby trumpet-205 » Tue Jan 08, 2013 11:09 am

This is how all credit cards work. Not Discover, not US. This is how they work in the world.

If you don't PIF, you will be charged of interest.
In My Wallet:
Citi Forward (12/2010) | Citi TY Preferred (05/2011) | Chase Freedom (11/2011) | GECRB/PayPal (05/2012)
Discover it (07/2012) | AMEX BCP (09/2012) | TD/Target REDCard (10/2012) | Chase Ink Classic (11/2012)
BofA BBR (04/2013) | FNBO/Overstock.com (02/2014) | Barclaycard Arrival (04/2014) | FIA/Fidelity AMEX (04/2014)

DavidNY
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Postby DavidNY » Tue Jan 08, 2013 11:53 am

Discover might kick it back if you ask nicely, though next time be sure to PIF.



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