Really quick and obvious question about credit card interest rate.

[fuzzybabybunny]

I've got a Chase Business Exclusives Visa Rewards card.

My last statement from 06/05 to 07/05 has a balance of $300. Minimum amount due by 7/26 is $10. Is the $300 already starting to accrue interest? Or does it only start to accrue interest after 7/26?

I'm pretty sure that my AmEx only starts to accrue interest after the first payment due date, and I'm going to guess that the Chase card is the same?

 

[OCGuy]

Check your grace period. They were 30 days...then 25....but some are getting even shorter.

 

[JS80]

Interest accrues THROUGH the grace period. Only if the payment is applied BEFORE the grace period is over, does the interest not post.

 

[fuzzybabybunny]

Oh Damn. Ok, I need to check up on my grace period them. Let's say that it's really short like 20 days.

My statement is from 06/05 to 07/05, minimum payment due date is 7/26, so if there was a 20 day grace period, interest starts to post on my account for the balance attained from 06/05 to 06/25 then?

Ex. From 06/05 to 07/05 I have these transactions:

6/05 - $100
6/20 - $100
7/4 - $100
7/26 - Payment due date

On 6/25 the interest from $200 is posted on my account? On the payment due date I will be paying my balance PLUS all the interest I have accrued from 6/05 to 7/26?

 

[rcpratt]

...

No interest starts to accrue until after the payment due date.

 

[Terabyte]

No interest starts to accrue until after the payment due date.

Yes.

Just pay off your bills every month if possible.

 

[fuzzybabybunny]

Yes.

Just pay off your bills every month if possible.

What's everyone posting about grace period then? The payment due date for me is 20 days after the ending period of the statement. So I guess I have a 20 day grace period? Otherwise on the 21st day if I don't pay off the full balance, I get instantly charged 21 days of interest from the balance?

 

[rcpratt]

There may be a grace period after the payment due date. While interest will accrue starting at the payment due date, they will ignore it if you pay within the grace period. If your grace period is 20 days, and you pay 21 days after the payment due date, you will pay 21 days interest. If your grace period is 20 days, and you pay 19 days after the payment date, you will pay no interest.

TLDR - Just pay it by the due date.

 

[Terabyte]

Oh Damn. Ok, I need to check up on my grace period them. Let's say that it's really short like 20 days.

My statement is from 06/05 to 07/05, minimum payment due date is 7/26, so if there was a 20 day grace period, interest starts to post on my account for the balance attained from 06/05 to 06/25 then?

Ex. From 06/05 to 07/05 I have these transactions:

6/05 - $100
6/20 - $100
7/4 - $100
7/26 - Payment due date

On 6/25 the interest from $200 is posted on my account? On the payment due date I will be paying my balance PLUS all the interest I have accrued from 6/05 to 7/26?

No. On 6/25, your statement total will be $200. You have until 7/26 to pay something between min amount due and total ($200). If you do not pay the total $200 by 7/26, you will be charged X% interest on whatever you did not pay off. Get it? There may be a grace period after your payment due date, but I've never looked into that. Like what rcpratt said, just pay off the statement balance by if not before the due date.

 

[akshatp]

Just pay it off before the 26th fool!

 

[postmortemIA]

some card companies charge average daily balance and have minimum finance fee ... answer is not straightforward anymore.

 

[IronWing]

Most cards I'm familiar with calculate interest using the average daily balance (as postmortemIA mentions) from the date the charges are posted. If you pay off the whole amount (statement balance) by the due date, then the interest is not applied to the account balance. If you let any of the balance roll over then different stuff happens with different banks but all of it is bad. Some apply all the interest accrued, even interest calculated on the portion of the principal you already paid while others only ding you for the unpaid portion. So pay the whole statement balance by the due date and live in an interest free world.

 

[JMapleton]

some card companies charge average daily balance and have minimum finance fee ... answer is not straightforward anymore.

Only if you have a crappy credit card. You shouldn't even have a cc if you can only use those crappy ones.

 

[postmortemIA]

Only if you have a crappy credit card. You shouldn't even have a cc if you can only use those crappy ones.

it is not that simple. Let's say they change their terms through time, from very great to ok, and you can opt out if you want and open brand new... but if you have card with them for 15 yrs and which happens to be your longest open account, then you'll want to keep it open to keep your credit score where it is.

 

[JMapleton]

it is not that simple. Let's say they change their terms through time, from very great to ok, and you can opt out if you want and open brand new... but if you have card with them for 15 yrs and which happens to be your longest open account, then you'll want to keep it open to keep your credit score where it is.

That's pretty rare unless you're with a crappy bank. You should be acquiring several back up cards, not just having one card that's 15 years old and then the rest of your cards less than a year or two old.

But if they're sticking it to you like that, dump them, even if it's a 15 year old card. You can build enough credit history within 2 or 3 years to get almost any card.

 

[Colt45]

I thought the grace period only applies if you had paid off the account on the prior billing cycle. Since your $100 from June carried over, you'll have to pay interest on the whole deal.