Confused by Intrest Rates/Charges - Help!

Newbie_Girl

Hi,

Im kind of new to this so be nice please!

Im a little confused by how my storecard is charging me intrest and i was wondering if anyone could advise if this is correct?

If you dont clear the entire balance at the end of the month they charge you intrest on the entire closing balance of the statement, regardless of what you paid off. Is this correct? I assumed (possibly v. nievely) that you'd be charged on what las left.

Thanks in advance for any advice!

CLAPTON

the usual method of charging interests used by CC and store cards is as follows
you get charged from the time you make the purchase to the time you actually pay it off.
However, if you clear the debt completely every month, they let you off the interest.

Newbie_Girl

So if you pay off 50% of the balance at the end of the month they still have the right to charge you the intrest on the full 100%?

latecomer

Yup. the only way to avoid interest is to pay off the full balance or have a card that offers 0% interest on purchases.

CLAPTON

Newbie_Girl wrote: »

So if you pay off 50% of the balance at the end of the month they still have the right to charge you the intrest on the full 100%?

thats right, you're charged on the daily balance

CLAPTON

robb01 wrote: »

exactly, thats why they make so much money

they charge you on the daily balance.... just like you would earn interest based on the daily balance of a savings account........ not unfair ..it just needs to be understood how it works

DipStick

What rate of interest are you paying on this card? Some storecards have very high rates of interest. You might be able to borrow the money at a cheaper rate elsewhere and pay off the storecard. Or better still pay off the storecard without borrowing the money elsewhere.