A few basic cc interest questions

adrianelliott

I know this is basic stuff, but I am struggling to get my head round credit card interest. It is likely over the coming year that I may sometimes not clear the full balance so I need to understand how interest will hit me. The card I am applying for is the Barclaycard Simplicity:
http://www.barclaycard.co.uk/personal-home/cards/simplicity/index.html

When I partially pay a statement, lets say £50 of £100, on time then how is the interest I pay calculated:-

• Do I only pay interest on the £50 unpaid balance?
• When is the interest I paid calculated back to? The card info says "Purchases From: transaction date", does this mean that they work out interest individually on every item based on when I bought it?
• If I send an additional £50 to the credit card company a week after the due date, does this stop interest from accumulating on the unpaid £50, or does it just get used to pay off my more recent purchases which will be on the next statement?

Many thanks, I hope this hasn't been all asked before - as you can imagine searching for interest terms brings back almost every credit card thread.

Paul_Herring

adrianelliott wrote: »

Do I only pay interest on the £50 unpaid balance?

Of course

When is the interest I paid calculated back to? The card info says "Purchases From: transaction date", does this mean that they work out interest individually on every item based on when I bought it?

For the first period of interest yes. Thereafter it's back to the date of the previous statement.

If I send an additional £50 to the credit card company a week after the due date, does this stop interest from accumulating on the unpaid £50, or does it just get used to pay off my more recent purchases which will be on the next statement?

Neither.

It will be used to (part) pay off balances incurring interest at the lowest rate. Assuming they're all at the same rate, out of the answers you gave, the closest is the first, but since you didn't pay the balance off in full, that £50 was incurring more interest from the date of [strike]the statement[/strike] (more likely) date of purchase. You clear the £50, but you don't clear the interest accrued for those couple of days. If you wish to 'clear' it you have to pay slightly more.


It is this last reason that leads to interest being incurred the 2nd month after clearing the balance, and why you have to pay off in full 2 months running in order to take advantage of the 'interest free period' (30-60 days) on CCs.

CLAPTON

My view is

but lets give a different example... suppose you spend 100 but only pay off 40

then you pay interest on the 40 until you pay it off
and you pay interest on the 60 until you pay it off
the interest will be included in the 'next' statement

yes they work out each item based on when you bought it.

if you send £60 after the due date then
- it will be insufficient to clear your debt because interest will have accrued even if not showing on the balance yet
- it depends upon the T&Cs how its counted... Barcalycard seem to hold the money until the next due date

adrianelliott

Thank-you for taking the time to write detailed replies, I have just read through the T&Cs of the card I applied for - they makes much more sense now I understand the context.