Why is my credit card interest twice what it should be?

Max_Headroom_3

Oblivion wrote: »

And that's the best advice always. Only buy what you can afford today or when the next credit card bill comes in. Paying someone else interest is a self-imposed tax that should and can be avoided with a bit of common sense. Here endeth the lesson from St. Oblivion :A :rotfl: :rotfl: :rotfl:

Dave.

It's a very good lesson and one I normally religiously adhere to.

I put the reasoning behind this purchase in the original post because I knew it would seem an odd way of doing it (rather than waiting), but having worked so hard at clearing my mortgage this year I felt a treat was justified and £20ish worth of interest worth paying to get it in time for the Christmas break.

It's now looking more like £45, but hey ho, I'm saving a three figure interest charge on my mortgage every month from now on, not to mention no capital repayment either, so I'll live with it.

Of course this cost will no doubt pale into insignificance compared to how much I'll have missed saving as the same TV appears in the January Sales at £500 off, but there you go. I did get a very good deal (few hundred under retail) so hopefully won't be too bad a hit.

And you can't be sensible all the time.

Max_Headroom_3

King_Of_Fools wrote: »

It would probably pay you to see if you can get an overdraft for the other £962 as over such a short period of time it might work out cheaper to put the rest on the overdraft (that way you will still benefit from the interest free period).

Yes, maybe if I'd understood it better I'd have (as you say) been better to clear it completely and ride out the last £900ish on my overdraft. But we're only talking £40ish max so I'll live with the mistake this time (and know better next time, if there is a next time, I normally don't buy anything till I've got the money ready).

YorkshireBoy

Max_Headroom wrote: »

Of course this cost will no doubt pale into insignificance compared to how much I'll have missed saving as the same TV appears in the January Sales at £500 off...

Even worse, you could find yourself saying (as is normally the case at this time of year) "there's nowt on TV, shall we go out?" :rotfl:

On a serious point...well done on getting rid of the mortgage.

Max_Headroom_3

Incidentally, one thing it has rammed home to me is just how dear this sort of borrowing is!

I can live with the charges on less than £2K borrowed for a month or two on this one occasion, but people with five figure sums on cards just paying the minimum must be getting absolutely hammered every month!!! :eek:

Max_Headroom_3

YorkshireBoy wrote: »

Even worse, you could find yourself saying (as is normally the case at this time of year) "there's nowt on TV, shall we go out?" :rotfl:

On a serious point...well done on getting rid of the mortgage.

That is an excellent point, very good!! :rotfl: :rotfl: :rotfl:

And thank you, it's been a long time coming, and not without sacrifice along the way.

NickX

Max_Headroom wrote: »

So basically, if I buy something for £10,000 and then get the bill in and pay £10,000 before the due date I pay no interest (and have had over a month interest free if I time it right).

But if I pay £9,999 instead then I pay interest on the whole £10,000 still, up until the £9,999 payment, and then pay interest on the remaining £1? Not get the £9,999 interest free and then have to pay interest on the £1 over the whole period?

Or have I got that wrong?

No you have got it exactly right

Basically if you don't pay in full they are going to get you.

Max_Headroom_3

That's a real education, thank you.

Almost worth the cost to discover how these things work.

Kev64

What I love is the sneaky way they allocate payments. e.g. if you get a new card and balance transfer £10k onto it at a 'special rate' of 0% for x months, then go out and buy £100 of groceries on the same card, they will quietly move the £100 to the back of the payment queue, so your monthly repayments are coming off the inital £10k, and nothing off the £100. The £100 sits there forever accruing interest until you've cleared the £10k sitting in front of it in the queue.

I know they are businesses and making money is their raison d'être, but I have to wonder about the consciences of people who come up with devious tricks like that, designed to hoodwink people out of their money.