- Centurion Member
- Posts: 875
- Joined: Thu Apr 30, 2009 2:32 pm
- Location: Texas
Bear with me, please.
Assuming you paid your balance in full in the payment period previous to the one under consideration now, there should be no finance charge next month if you pay the balance as shown on your current statement in full by the due date.
If you failed to pay the full balance last month, then everything that carried over and all charges since are subject to finance charge. Assuming this is the case...
If you pay your current statement balance in full by the due date you will be charged interest on the charges that have accrued since this statement was cycled.
But if you go online or call and ascertain your current amount outstanding, you can avoid paying some (maybe all, but probably not; I'll explain why) of the interest on the charges subsequent to your last statement by paying this amount in full.
Trouble is you don't know what method the bank uses to compute interest...It could be based on high balance of the month; they may take two or more snaps of your account per billing period and base interest on whatever that amount is; it could be average daily balance, or it could be something else. I've never really understood how this works and I don't think anyone really does :-). You won't go wrong if you assume that the method used will be the most advantageous to the bank -- in your case (if you rolled a balance over) one that starts the interest clock soonest and keeps it ticking as long as possible.
My point is, even if you knew to the penny to the day (hour by hour?) the interest being charged and had the money to pay and did so immediately, you would probably still owe some residual amount of interest in the next statement cycle -- it would be the amount that accrued between the time you figured out what your total liability was going to be and the time your payment posted.
My final point is that this whole exercise is probably moot because if you pay on line -- which is what you would have to do to minimize/eliminate interest under the scenario above -- you would only be able to pay the outstanding balance at the moment of payment. The bank almost certainly -- if it's like any of mine -- won't let you pay more than you're outstanding balance, which is what you would have to do if you want to get out in front of an interest clock that's already ticking.
Does that make sense?
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